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BOARD OF DIRECTORS

SUDHIR MANKADChairman

DR. PAWAN GOENKA

DR. T.N.KAPOOR

R.R.DESHPANDE

VIJAY VARMA

RAJESH JEJURIKAR

S.DURGASHANKAR

DILEEP C. CHOKSI

NEERA SAGGI

SUBHASH MAGOWhole Time Director &Chief Executive Officer

Company SecretaryM.S. GREWAL

Chief Financial OfficerRAJINDER ARORA

AuditorsM/S DAVINDER S. JAAJ & CO.Chartered Accountants

BankersCANARA BANKHDFC BANK LIMITEDAXIS BANK LIMITED

Registered OfficePhase-IV, Industrial AreaS.A.S. Nagar (Mohali)Punjab 160 055

WorksPlot No. 2, Industrial Phase IXS.A.S. Nagar (Mohali)Punjab 160 062

Websitewww.swarajenterprise.com

Swaraj Engines Limited

SWARAJ ENGINES LIMITED

http://www.swarajenterprise.com


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ANNUAL GENERAL MEETINGon Monday, 24th July, 2017at 3:00 P.M. at Swaraj Engines LimitedPlot No. 2, Industrial Phase IXS.A.S. Nagar (Mohali)Punjab 160 062

CONTENTS PAGE NO.

Key Performance Indicators – Last Ten Years 3

Notice of Annual General Meeting 4

Report of the Directors 13

Management Discussion and Analysis 20

Corporate Governance Report 23

Corporate Governance Compliance Certificate 44

Annexure to Directors’ Report 45

Balance Sheet 62

Statement of Profit and Loss 63

Significant Accounting Policies 66

Notes on Accounts 69

Cash Flow Statement 93

Auditors’ Report 95


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KEY PERFORMANCE INDICATORS - LAST TEN YEARS(Rs. in Crores)

Indian GAAP Ind AS*

Fiscal Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Engines Sold (Nos.) 16408 28539 39143 47413 55239 57377 74062 64595 64088 822.97

Total Revenue (Net)^ 125.54 208.34 286.62 363.45 452.64 486.11 614.75 543.31 528.27 667.07

PBIDT 23.36 32.04 53.75 63.08 73.43 78.56 97.11 78.33 76.13 105.62

Finance Charges (Net) (3.27) (4.87) (5.80) (5.73) (8.10) (8.10) (10.97) (12.69) (13.88) (16.13)

Depreciation 4.59 4.69 4.84 4.46 4.26 7.16 9.12 13.20 13.80 16.28

Profit Before 22.04 32.22 54.71 64.35 77.27 79.50 98.96 77.82 76.21 105.46Exceptional Items

Exceptional Items – – – – – – 1.15 – – –[Expenses / (Income)]

Profit Before Tax 22.04 32.22 54.71 64.35 77.27 79.50 97.81 77.82 76.21 105.46

Income Tax 7.68 10.95 17.36 20.44 24.45 24.10 30.81 25.98 24.90 36.63

Profit After Tax 14.36 21.27 37.35 43.91 52.82 55.40 67.00 51.84 51.31 68.83

Other Comprehensive (Net of Tax) – – – – – – – – (0.11) 0.20

Total Comprehensive Income – – – – – – – – 51.20 69.03

Dividend % 50 50 80 100 130 330 # 350# 330# 330# 430#

Dividend Payout 6.21 6.21 9.94 12.42 16.15 40.99 43.47 40.99 40.99 53.40

Equity Share Capital 12.42 12.42 12.42 12.42 12.42 12.42 12.42 12.42 12.42 12.42

Net Worth 82.96 96.97 122.74 152.22 186.28 193.73 209.88 261.47 263.44 283.37

Capital Employed 88.04 100.84 125.42 154.14 189.48 200.06 216.82 267.78 271.04 289.64

Market Capitalisation 265.78 118.05 360.36 532.93 498.10 490.58 859.20 1003.83 1063.88 1842.48

PBIDT/Total Revenue % 18.6 15.4 18.8 17.4 16.2 16.2 15.8 14.4 14.4 15.8

Return on Net Worth % 17.3 21.9 30.4 28.9 28.4 28.6 31.9 19.8 19.5 24.3

Earning Per Share (Rs.) 11.6 17.1 30.1 35.4 42.5 44.6 53.9 41.7 41.3 55.4

Book Value Per Share (Rs.) 66.8 78.1 98.8 122.6 150.0 156.0 169.0 210.5 212.1 228.2

#Include Special Dividend of 200% in 2013 & 2014 and 180% in 2015 & 2016 and 250% in 2017.^ Total Revenue (Net) from 2012 onwards exclude interest income*The Company transitioned into Ind AS from April 1, 2015


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NOTICE OF ANNUAL GENERAL MEETINGNotice is hereby given that the 31st Annual General Meeting of Swaraj Engines Limited will be held on Monday, the 24th dayof July, 2017 at 3.00 P.M. at the Works of the Company at Plot No. 2, Industrial Phase IX, S.A.S.Nagar (Mohali), Punjab -160 062 to transact the following businesses:

ORDINARY BUSINESS

1. To receive, consider and adopt the Audited Financial Statements of the Company for the Financial Year ended 31stMarch, 2017 including the audited Balance Sheet as at 31st March, 2017 and the Statement of Profit and Loss for theyear ended on that date and the Reports of the Directors and the Auditors thereon.

2. To declare a Dividend on Equity Shares.

3. To appoint a Director in place of Shri S. Durgashankar (DIN 00044713) who retires by rotation and, being eligible, offershimself for re-appointment.

4. To appoint a Director in place of Dr. Pawan Goenka (DIN 00254502) who retires by rotation and, being eligible, offershimself for re-appointment.

5. To appoint Auditors and fix their remuneration and in this regard to consider and, if thought fit, to pass, with or withoutmodification(s), the following resolution as an Ordinary Resolution :

"RESOLVED that pursuant to Section 139, Section 142 and other applicable provisions, if any, of the Companies Act,2013 and Rules framed thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time beingin force) and pursuant to the recommendation of the Audit Committee, M/s B.K. Khare & Co., Chartered Accountants(ICAI Firm Registration Number 105102W), be appointed as Auditors of the Company to hold office from the conclusionof this Annual General Meeting ("AGM"), until the conclusion of the fifth consecutive AGM of the Company to be held inyear 2022 (subject to ratification of the appointment by the Members at every AGM held after this AGM), at a remunerationto be determined by the Board of Directors of the Company in addition to out of pocket expenses as may be incurred bythem during the course of the Audit."

SPECIAL BUSINESS

6. To consider and if thought fit, to pass, with or without modification(s), the following Resolution as an OrdinaryResolution:

"RESOLVED that pursuant to the provisions of Section 152 and all other applicable provisions of the Companies Act,2013 and Rules framed thereunder (including any statutory modification(s) or re-enactment thereof for the time being inforce), Shri Rajesh Jejurikar (DIN 00046823), who was appointed by the Board of Directors as an Additional Director ofthe Company with effect from 25th April, 2017 and who holds office upto the date of this Annual General Meeting of theCompany in terms of Section 161 of the Companies Act, 2013 and in respect of whom the Company has received anotice in writing from a Member under Section 160 of the Companies Act, 2013 proposing his candidature for the officeof Director of the Company, be and is hereby appointed as a Director of the Company, liable to retire by rotation."

7. To consider and if thought fit, to pass, with or without modification(s), the following Resolution as an OrdinaryResolution:

"RESOLVED that pursuant to the provisions of Section 152 and all other applicable provisions of the Companies Act,2013 and Rules framed thereunder (including any statutory modification(s) or re-enactment thereof for the time being inforce), Shri Subhash Mago (DIN 07797207), who was appointed by the Board of Directors as an Additional Director of theCompany with effect from 25th April, 2017 and who holds office upto the date of this Annual General Meeting of theCompany in terms of Section 161 of the Companies Act, 2013 and in respect of whom the Company has received anotice in writing from a member under Section 160 of the Companies Act, 2013 proposing his candidature for the officeof Director of the Company, be and is hereby appointed as a Director of the Company."


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8. To consider and if thought fit, to pass, with or without modification(s), the following Resolution as a SpecialResolution:

"RESOLVED THAT pursuant to the provisions of Sections 196, 197, 203 read with Schedule V and all other applicableprovisions of the Companies Act, 2013 ("the Act"), the Companies (Appointment & Remuneration of Managerial Personnel),Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force) and subject tothe approval of Central Government, if necessary, and such other approvals, permissions and sanctions, as may berequired and subject to such conditions and modifications, as may be prescribed or imposed by any of the authoritieswhile granting such approvals, permissions and sanctions, approval of the Shareholders of the Company be accorded tothe appointment of Shri Subhash Mago (DIN: 07797207) as Whole Time Director of the Company designated as WholeTime Director & Chief Executive Officer (hereinafter referred to as "the appointee") with effect from 25th April, 2017 to31st March, 2020 on the following terms of appointment:

Tenure : From 25th April, 2017 to 31st March, 2020

Basic Salary : Rs 1,94,482/- per month in the scale of 1,74,000/- per month to Rs. 2,83,000/- per month

Perquisites/Allowances:

In addition to the salary, the appointee shall also be entitled to such perquisites/allowances which shall include Company'sleased accommodation or house rent allowance in lieu thereof, medical reimbursement, leave travel assistance, if any,performance pay to be paid annually, based on certain performance criteria to be laid down from time to time, encashmentof leave, contributions to provident fund, superannuation fund or allowance in lieu thereof, gratuity, provision for Companycar, fuel and maintenance thereof, medical and personal accident insurance, telephone and other communication facilitiesat residence, and such other allowances, perquisites, benefits, amenities and facilities in accordance with the Company'srules/policy. Further, he shall be entitled to stock options as per the Company's Employees Stock Option Scheme.

The value of perquisites/allowances would be evaluated as per Income-tax Rules, 1962, as amended from time to time,wherever applicable and at cost in the absence of any such rule.

Contribution to Provident Fund, Superannuation and Gratuity would not be included in the computation of overall ceilingon remuneration to the extent these either singly or put together are not taxable under the Income-tax Act, 1961.

Encashment of earned leave at the end of the tenure as per the Company's rules/policy shall not be included in thecomputation of ceiling on remuneration.

Provision of car for use on the Company's business, telephone and other communication facilities at residence wouldnot be considered as perquisites :

Provided that the remuneration payable to the appointee (including the salary, perquisites/allowances, benefits andamenities) does not exceed the limits laid down in Section 197 of the Act including any statutory modification(s) or re-enactment thereof.

Annual increment/revision in the remuneration payable to the appointee within the overall scale of remuneration mentionedabove, would be approved by the Nomination and Remuneration Committee.

RESOLVED FURTHER THAT where in any financial year during the currency of the tenure of the appointee, theCompany has no profits or its profits are inadequate, the Company may pay him, the above remuneration as theminimum remuneration for a period not exceeding 3 years by way of salary, perquisites/allowances and benefits asspecified above subject to the compliance of the applicable laws.

RESOLVED FURTHER THAT for the purpose of giving effect to this resolution, Board of Directors of the Company(hereinafter referred to as the 'Board' which term shall be deemed to include any duly authorised Committee thereof, forthe time being exercising the powers conferred on the Board by this resolution) be and are hereby authorised severallyto do all such acts, deeds, matters and things as it may deem necessary, proper or desirable and to settle any questions,difficulties or doubts that may arise in this regard and further to execute all necessary documents, applications, returnsand writings as may be necessary, proper, desirable or expedient."


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9. To consider and, if thought fit, to pass, with or without modification(s), the following as an Ordinary Resolution:

"RESOLVED that pursuant to the provisions of Section 148 and other applicable provisions, if any, of the CompaniesAct, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment(s)thereof, for the time being in force) and pursuant to the recommendation of the Audit Committee, the remunerationpayable to M/s V. Kumar & Associates, Cost Accountants having Firm Registration No. 100137, appointed by the Boardof Directors of the Company as Cost Auditors to conduct the audit of the cost records of the Company for the FinancialYear ending 31st March, 2018, amounting to Rs. 1,00,000/- (Rupees One lakh only) (excluding all taxes and reimbursementof out of pocket expenses) be ratified and confirmed.

FURTHER RESOLVED that approval of the Company be accorded to the Board of Directors of the Company (includingany Committee thereof) to do all such acts, deeds, matters and things and to take all such steps as may be required inthis connection including seeking all necessary approvals to give effect to this Resolution and to settle any questions,difficulties or doubts that may arise in this regard."

NOTES

1. Explanatory statement as required under Section 102(1) of the Companies Act, 2013 is annexed hereto.

2. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY TOATTEND AND VOTE INSTEAD OF HIMSELF AND A PROXY NEED NOT BE A MEMBER. A person can act as proxyon behalf of members not exceeding fifty (50) and holding in the aggregate not more than ten percent of the total sharecapital of the Company.

3. The instrument appointing a proxy must be deposited with the Company at its Registered Office not less than 48 hoursbefore the time for holding the Meeting.

4. The Company's Registrar and Share Transfer Agent for its Share Registry Work (Physical and Electronic) are M/s MCSShare Transfer Agent Limited having their office at F-65, First Floor, Okhla Industrial Area, Phase I, New Delhi - 110 020.

5. The Register of Members and Share Transfer Books of the Company will be closed from 8th July, 2017 to 14th July,2017 (both days inclusive).

6. The dividend, if declared at the Annual General Meeting, would be paid / despatched on or after 25th July, 2017 to thoseshareholders or their mandates:

(a) whose names appear as Beneficial Owners as at the end of the business hours on 7th July, 2017 in the list ofBeneficial Owners to be furnished by National Securities Depository Limited and Central Depository Services(India) Limited in respect of the shares held in electronic mode; and

(b) whose names appear as Members in the Register of Members of the Company after giving effect to valid sharetransfers in physical form lodged with the Company / its Registrar and Share Transfer Agent on or before 7th July,2017.

7. Members/Proxies are requested to bring their attendance slips and copy of Annual Report to the Meeting.

8. Members desirous of obtaining any information concerning the accounts and operations of the Company are requestedto address their questions in writing to the Secretary of the Company at least 10 days before the date of the Meeting sothat information required may be compiled and made available at the Meeting.

9. Pursuant to the provisions of Section 205A of the Companies Act, 1956, the Company has transferred unclaimeddividends for and upto the financial year ended 31st March, 2009 to the Investor Education and Protection Fund (IEPF).The Company has uploaded the information of unclaimed / unpaid dividend lying with the Company as on 26th July, 2016(date of last Annual General Meeting) on the website of the Company (www.swarajenterprise.com). Members who havenot encashed the dividend warrant(s) so far for any subsequent financial years are requested to make their claims to theCompany. It may be noted that once the amounts in the unpaid dividend accounts are transferred to the IEPF, no claimshall lie against the IEPF or the Company in respect thereof.

http://www.swarajenterprise.com).


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10. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN)by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submittheir PAN to their Depository Participants with whom they are maintaining their demat accounts. Members holdingshares in physical form can submit their PAN to the Company / Registrar.

11. Members can avail of the facility of nomination in respect of shares held by them in physical form pursuant to theprovisions of Section 72 of the Companies Act, 2013. Members desiring to avail of this facility may send their nominationin the prescribed Form SH13 duly filled in to Company's Registrar and Share Transfer Agent, M/s MCS Share TransferAgent Limited at their above mentioned address. Members holding shares in electronic mode may contact their respectiveDepository Participants for availing this facility.

12. Payment of Dividend through ECS:

a) The Securities and Exchange Board of India has made it mandatory for all companies to use the bank accountdetails furnished by the Depositories for the payment of dividend through Electronic Clearing Service (ECS) toinvestors wherever ECS and bank details are available. In the absence of ECS facilities, the Company will print thebank details, if available, on the payment instrument for distribution of dividend. The Company will not entertainany direct request from Members holding shares in electronic mode for deletion of / change in such bank details.Further, instructions, if any, already given by them in respect of shares held in physical form will not be automaticallyapplicable to shares held in the electronic mode. Members who wish to change such bank account details aretherefore requested to advise their Depository Participants about such change, with complete details of bankaccount.

b) Members holding shares in physical form and wishing to avail the facility of electronic credit of dividend directly totheir respective bank accounts through the Electronic Clearing Service (ECS) / National Electronic Clearing Service(NECS) are requested to intimate the particulars of their bank account, viz., name and address of the branch of thebank with 9 digit MICR code of the branch & 11 digit IFSC, type of account and account number latest by 14th July,2017, to Company's Registrar and Share Transfer Agent, M/s MCS Share Transfer Agent Limited. Memberslocated in places where ECS/NECS facility is not available may submit their bank details to enable the Companyto incorporate this information on the dividend warrants and thus prevent fraudulent encashment.

13. For receiving all shareholder communications faster, including annual reports, the shareholders are requested to kindlyregister/update their e-mail address with their respective Depository Participant, where shares are held in electronicmode. If, however, shares are held in physical form, shareholders are advised to register their e-mail address withCompany's Registrar and Share Transfer Agent, M/s MCS Share Transfer Agent Limited.

14. Members are requested to:

– Intimate to the Company's Registrar and Share Transfer Agent, M/s MCS Share Transfer Agent Limited at theirabove mentioned address, changes, if any, in their registered addresses at an early date, in case of shares held inphysical form.

– Intimate directly to the respective Depository Participant, changes, if any, in their registered addresses, nomination,power of attorney etc. at an early date, in case of shares held in dematerialised form. The Company will not takecognizance of any such requests directly from shareholders.

– Quote their folio numbers/Client ID/ DP ID in all correspondence.

– Consolidate their holdings into one folio in case they hold shares under multiple folios in the identical order ofnames.

15. Voting through electronic means

I. In compliance with provisions of Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Managementand Administration) Rules, 2014, as amended and Regulation 44 of SEBI (Listing Obligations and DisclosureRequirements) Regulations, 2015, the Company is pleased to provide members facility to exercise their right tovote at the 31st Annual General Meeting (AGM) by electronic means and the business may be transacted through


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e-voting services provided by National Securities Depository Limited (NSDL). The shareholders may cast their voteusing an electronic voting system from a place other than the venue of the meeting ("Remote e-voting").

The instructions for remote e-voting are as under:

A. In case a Member receives an email from NSDL [for members whose email IDs are registered with theCompany/Depository Participant(s)]:

(i) Open email and open attached PDF file with your Client ID or Folio No. as password. The said PDF filecontains your user ID and password/PIN for e-voting. Please note that the password is an initial password.

(ii) Open the internet browser by typing the URL: https://www.evoting.nsdl.com

(iii) Click on Shareholder - Login

(iv) If you are already registered with NSDL for e-voting then you can use your existing user ID and password.

(v) If you are logging in for the first time, please enter the user ID and password provided in the PDF fileattached with the e-mail as initial password.

(vi) Password change menu will appear on your screen. Change the password with new password of yourchoice with minimum 8 digits/characters or combination thereof. Note the new password. It is stronglyrecommended not to share your password with any other person and take utmost care to keep yourpassword confidential.

(vii) Once the e-voting home page opens, click on e-Voting> Active Voting Cycles.

(viii) Select "EVEN" (E-Voting Event Number) of Swaraj Engines Limited. Now you are ready for e-voting asCast Vote page opens.

(ix) Cast your vote by selecting appropriate option and click on "Submit" and also "Confirm" when prompted.

(x) Upon confirmation, the message "Vote cast successfully" will be displayed.

(xi) Once you have voted on the resolution, you will not be allowed to modify your vote.

(xii) Institutional shareholders (i.e. other than individuals, HUF, NRI etc.) are required to send scanned copy(PDF/JPG Format) of the relevant Board Resolution/Authority letter etc. together with attested specimensignature of the duly authorized signatory(ies) who are authorized to vote, to the Scrutinizer through e-mail to [email protected] with a copy marked to [email protected]

B. For the members whose email IDs are not registered with the Company/Depository Participant(s):

(i) Initial password alongwith physical copy of the Notice of AGM is being sent separately in the permittedmode.

(ii) Please follow all steps from Sl. No. (ii) to Sl. No. (xii) above, to cast vote.II. In case of any queries, you may refer the Frequently Asked Questions (FAQs) for Shareholders and e-voting user

manual for Shareholders available at the Downloads Section of www.evoting.nsdl.com or call on toll free number1800-222-990.

III. You can also update your mobile number and e-mail id in the user profile details of the folio which may be used forsending future communication(s).

IV. The remote e-voting period commences on 20th July, 2017 (9:00 a.m.) and ends on 23rd July, 2017 (5:00 p.m.).During this period shareholders of the Company, holding shares either in physical form or in dematerialized form,as on the cut-off date, the 17th July, 2017, may cast their vote electronically. The e-voting module shall be disabledby NSDL for voting thereafter. Once the vote on a resolution is cast by the shareholder, the shareholder shall not beallowed to change it subsequently or cast the vote again. The shareholders who have cast their vote by remote e-voting may also attend the Meeting but shall not be entitled to cast their vote again.

https://www.evoting.nsdl.com

mailto:[email protected]


http://www.evoting.nsdl.com


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V. The facility for voting through ballot will also be made available at the AGM and shareholders attending the AGMwho have not already cast their vote by remote e-voting will be able to exercise their right at the AGM.

VI. The voting rights of shareholders shall be in proportion to their shares of the paid up equity share capital of theCompany as on the cut-off date, the 17th July, 2017.

VII. Any person, who acquires shares of the Company and become shareholder of the Company after dispatch of theNotice and holding shares as on the cut-off date i.e 17th July, 2017, may obtain the Login ID and password bysending a request at [email protected] or Registrar and Share Transfer Agent of the Company.

If the shareholder is already registered with NSDL for remote e-voting then he can use his existing User ID andpassword for casting the vote through remote e-voting.

VIII. Mr. Ajay K Arora, Practicing Company Secretary (Membership No.2191), Proprietor - M/s. A. Arora & Co., CompanySecretaries, has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparentmanner and he has communicated his willingness to be appointed and will be available for same purpose.

IX. The Scrutinizer shall immediately after the conclusion of voting at the Annual General Meeting, first count thevotes cast at the meeting, thereafter unblock the votes cast through remote e-voting in the presence of at least twowitnesses not in the employment of the Company and make a consolidated Scrutinizer's Report of the total votescast in favour or against, if any, to the Chairman or a person authorized by him in writing who shall countersign thesame.

X. As per Regulation 44 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the results ofe-voting are to be communicated to the BSE Limited and National Stock Exchange of India Limited, where theshares of the Company are listed, within 48 hours of the conclusion of the Annual General Meeting. The resultsdeclared alongwith the Scrutinizer's Report shall be placed on the Company's website www.swarajenterprise.comand on the website of NSDL.

XI. Subject to receipt of requisite number of votes, the Resolutions shall be deemed to be passed on the date of theMeeting, i.e. 24th July, 2017.

16. Re-appointment of Directors

Shri S. Durgashankar and Dr. Pawan Goenka shall retire by rotation at the forthcoming Annual General Meeting andbeing eligible, offer themselves for re-appointment.

Shri S. Durgashankar and Dr. Pawan Goenka do not hold any Equity Shares in the Company.

None of the Directors of the Company are interse related to each other.

In respect of the information to be provided under Regulation 36 of SEBI (Listing Obligations and Disclosure Requirements)Regulations, 2015 pertaining to the Directors being re-appointed, Members are requested to kindly refer the Chapter onCorporate Governance in the Annual Report.

17. The route map of the venue of the Meeting is attached to the Notice.

Registered Office : BY ORDER OF THE BOARDPhase IV, Industrial AreaS.A.S. Nagar (Mohali)Punjab - 160 055Tel: 0172-2271620-27, Fax: 0172-2272731 (M.S. GREWAL)Email: [email protected] Company SecretaryWebsite: www.swarajenterprise.comCIN: L50210PB1985PLC00647325th April, 2017






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ANNEXURE TO NOTICE

Explanatory Statement pursuant to Section 102(1) of the Companies Act, 2013 relating to the items of the Special Business

Item No. 6

Shri Rajesh Jejurikar was appointed by the Board as an Additional Director with effect from 25th April, 2017. He holds officeupto the date of the ensuing Annual General Meeting pursuant to Section 161 of the Companies Act, 2013 ("the Act"). TheCompany has received a notice in writing from a member under Section 160 of the Act proposing the appointment of ShriJejurikar as a Director of the Company.

Having joined in Automotive Sector of Mahindra & Mahindra Limited (M&M) in 2000 as Vice-President - Marketing,Shri Rajesh Jejurikar is currently the President - Farm Equipment Sector (FES) and a Member of the Group Executive Boardof Mahindra & Mahindra Limited. He also oversees the Mahindra Two Wheelers business and serves on the boards of severalgroup companies of M&M. He is also current President of the Tractor Manufacturers Association (TMA).

A 1986 batch MBA from S.P. Jain Institute of Management, Shri Jejurikar has attended the Advanced Management Programat The Wharton School, University of Pennsylvania and was awarded the British Chevening Scholarship to study at theManchester Business School, UK.

The Board is of the view that Shri Jejurikar's wide and varied experience will be of immense value to the Company and,therefore, recommends his appointment to the members in terms of Resolution set out in Item No. 6 of the Notice.

Shri Jejurikar does not hold any shares in the Company.

Except Shri Rajesh Jejurikar, none of the Directors, key managerial personnel of the Company and their relatives are, in anyway concerned or interested, financially or otherwise, in the resolution set out at Item No.6 of the Notice.

Item No. 7 and Item No. 8

Shri Subhash Mago was appointed by the Board as an Additional Director with effect from 25th April, 2017. He holds officeupto the date of the ensuing Annual General Meeting pursuant to Section 161 of the Companies Act, 2013 ("the Act"). TheCompany has received a notice in writing from a member under Section 160 of the Act proposing the appointment of ShriMago as a Director of the Company.

Further, in order to facilitate seamless succession upon completion of Shri M.N. Kaushal tenure as Whole Time Director of theCompany on 31st March, 2017, the Board of Directors in its meeting held on 25th April, 2017 has, subject to the approval ofmembers, also appointed Shri Subhash Mago as Whole Time Director of the Company designated as Whole Time Director &Chief Executive Officer with effect from 25th April, 2017 to 31st March, 2020 at the remuneration recommended by Nominationand Remuneration Committee of the Board and approved by the Board.

Shri Subhash Mago, currently Chief Executive Officer of the Company, is a Bachelor of Engineering from IIT, Roorkee andhas more than 35 years experience in Purchasing, Manufacturing, Quality Systems, Component Development, Supply ChainManagement, Value Engineering and New Product Development. After working for 17 years in Maruti Udyog Ltd., he joinedMahindra & Mahindra Ltd. (M&M) in 2000 and since then has worked on many strategic assignments. His last assignment inM&M was as Senior Vice-President of Farm Division - Component Development & Material Management (CDMM).

The Board is of the view that Shri Mago's varied experience will be of immense value to the Company and, therefore,recommends his appointment to the members in terms of Ordinary Resolution set out in Item No. 7 and Special Resolution setout in Item No. 8 of the Notice.

Terms of remuneration of Shri Subhash Mago are set out in the Special Resolution under Item No. 8 of the Notice.

Shri Mago does not hold any shares in the Company.

Except Shri Subhash Mago, none of the Directors, key managerial personnel of the Company and their relatives are, in anyway, concerned or interested, financially or otherwise, in the resolution set out at Item Nos. 7 and 8 of the Notice.

The following additional information as required by Schedule V to the Act is given below:


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I. General Information

(1) Nature of Industry

The Company is in the business of manufacture of Diesel Engines and its components.

(2) Date or expected date of commencement of commercial production

The Company was incorporated on 24th September, 1985 and started commercial production of diesel engines inthe year 1989.

(3) In case of new companies, expected date of commencement of activities as per project approved by financialinstitutions appearing in the prospectus.

Not Applicable

(4) Financial performance based on given indicators - as per audited financial results for the year ended 31st March,2017

Particulars (Rs. in Crores)

Net Turnover & Other Income 683.32

Net profit as per Statement of Profit & Loss (After Tax) 69.03(Including other comprehensive income)

Profit as computed under Section 198 of the Act 69.03

Net Worth 283.37

(5) Foreign investments or collaborations, if any

Nil

II. Information about the appointee

(1) Background details

Shri Subhash Mago

Shri Subhash Mago joined the Company as Chief Executive Officer with effect from 1st October, 2016.

Shri Mago is a Bachelor of Engineering from IIT, Roorkee and has more than 35 years experience in Purchasing,Manufacturing, Quality Systems, Component Development, Supply Chain Management, Value Engineering andNew Product Development. After working for 17 years in Maruti Udyog Ltd., he joined Mahindra & Mahindra Ltd.(M&M) in 2000 and since then has worked on many strategic assignments. His last assignment in M&M was asSenior Vice-President of Farm Division - Component Development & Material Management (CDMM).

(2) Past remuneration during the financial year ended 31st March, 2017

Not applicable, fresh appointment with effect from 25th April, 2017.

(3) Recognition or awards

Career profile already covered in the section "Background details".

(4) Job Profile and his suitability

Shri Subhash Mago, Whole Time Director, will be responsible for looking after operations and affairs of the Company.Taking into consideration his qualifications and expertise in relevant fields, he is best suited for the responsibilitiescurrently assigned to him by the Board of Directors.

(5) Remuneration proposed

As set out in Item No. 8 of the Notice.


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REPORT OF THE DIRECTORS TO THE MEMBERSYour Directors present their 31st Annual Report together with Audited Accounts for the financial year ended 31st March, 2017.

A. FINANCIAL RESULTS AND OPERATIONAL REVIEW :(Rs. in Crores)

Year Ended Year Ended31st March, 2017 31st March, 2016

Net Operating Revenue 666.14 525.91Profit before Other Income, Depreciation, Finance Charges,Exceptional items and Tax 104.68 73.76Other Income 17.18 16.30Profit before Depreciation, Finance Charges, Exceptional items and Tax 121.86 90.06Finance Cost 0.12 0.05Depreciation and Amortisation Expense 16.28 13.80Profit before Exceptional Items & Tax 105.46 76.21Exceptional Items - -Profit Before Tax 105.46 76.21Tax Provision - Current 37.96 23.30 - Deferred (1.33) 1.60Profit After Tax 68.83 51.31Other Comprehensive Income (net of Tax) 0.20 (0.11)Total Comprehensive Income 69.03 51.20

Performance Review

Financial year 2016-17 turned out to be an overall good year for the Company. The tractor industry with which your Company'sbusiness has direct linkage, posted a decent growth of 18% after witnessing de-growth in last two consecutive years. This hasin turn facilitated your Company to achieve its all-time high engine sales volume of 82,297 units with a growth of 28% over lastyear's sale of 64,088 units. Based on this solid increase in engine sales volume, SEL, for the first time has crossed themilestone of achieving Rs. 100 crores+ profit by posting a pre-tax profit of Rs. 105.46 crores.

With the increased engines sale volume, net operating revenue of your Company for the financial year 2016-17 reached Rs.666.14 crores as against Rs. 525.91 crores for the last year. The higher sales coupled with continued focus on cost controlinitiatives, your Company was able to improve its operating margin by 170 basis points over last year - from 14.0% to 15.7%.Consequently, operating profit for the year stood at Rs. 104.68 crores (last year - Rs. 73.76 crores) - an improvement of 42%.Profit before tax for the year stood at Rs. 105.46 crores (previous year - Rs. 76.21 crores). While Profit after tax (before othercomprehensive income) of Rs. 68.83 crores (previous year - Rs. 51.31 crores) translates into Basic Earning Per Share of Rs.55.42 (previous year - Rs. 41.31), the total comprehensive income (net of tax) stood at Rs. 69.03 crores against previous year'sRs. 51.20 crores.

Taking note of the emerging demand scenario in the coming years and to timely cater the customer requirements, yourCompany has also finalised another capacity expansion programme to increase its capacity to 1,20,000 engines per annumfrom existing 1,05,000 engines per annum by the end of next fiscal. This capacity expansion will be fully financed through theinternal resources.

FINANCE

The fund position of the Company remained comfortable throughout the year under review and after meeting the capitalexpenditure and working capital requirements to support operations, the Company has generated an income of Rs. 16.90 crores(previous year - Rs. 16.09 crores) on surplus funds.


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Dividend

Your Directors are pleased to recommend an equity dividend of Rs.18.00 per share of the face value of Rs. 10 each for thefinancial year ended 31st March, 2017. Further, keeping in view the overall fund position of the Company, the Board, over andabove the said normal dividend, has also recommended a special dividend of Rs. 25.00 per share, taking the total dividend toRs. 43.00 per share for the financial year 2016-17 (previous year - Rs. 33.00 per share).

If approved by the Shareholders at the ensuing Annual General Meeting, the above equity dividend will be paid to thoseshareholders whose names shall appear in the Register of Members as on the Book Closure date. The total equity dividendoutgo for the financial year 2016-17, including dividend distribution tax, surcharge and education cess will absorb a sum of Rs.64.28 crores (previous year - Rs. 49.33 crores). Further, the Board of your Company has decided not to transfer any amount tothe General Reserves for the year under review.

Current Year's Review

With government's continued thrust on agri sector and the forecast of normal monsoon for this year, the tractor industry isexpected to maintain its growth trajectory in the current fiscal as well. In this backdrop, the engine business of your Companyis also expected to benefit from industry growth.

B. INTERNAL FINANCIAL CONTROL SYSTEMS

The Company has laid down adequate internal financial controls with reference to financial statements, commensurate with thesize, scale and complexity of its operations. During the year, such controls were tested and no reportable material weaknessin its operating effectiveness was observed.

C. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under the SEBI (Listing Obligationsand Disclosures Requirements) Regulations, 2015 forms part of this Annual Report.

D. RELATED PARTY TRANSACTIONS

All related party transactions that were entered during the financial year 2016-17 were in the ordinary course of the business andwere on arm's length basis. There were no materially significant related party transactions made by the Company which mayhave a potential conflict of the interest with its Promoters, Directors, Key Managerial Personnel or other persons. All suchrelated party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval fornormal transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive natureas well as for the transactions which cannot be foreseen and the same are subsequently shared with Audit Committee onquarterly basis. The policy on materiality of and dealing with related party transactions as approved by the Audit Committee andthe Board of Directors is uploaded on the website of the Company and the link for the same is (http://www.swarajenterprise.com/policies). The disclosure of related party transactions pursuant to Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 is annexed herewith as "Annexure A".

E. BOARD AND COMMITTEES

Directors

Consequent upon his resignation, Shri Rajan Wadhera ceased to be a Director of the Company with effect from 24th April, 2017.Further, Shri M.N. Kaushal, upon completion of his tenure as Whole Time Director on 31st March, 2017, also ceased to be aDirector of the Company with effect from 1st April, 2017. Your Board has placed on record its sincere appreciation of thesignificant and notable contributions made by Shri Wadhera and Shri Kaushal during their tenure as Directors of the Company.

Shri Rajesh Jejurikar and Shri Subhash Mago were appointed as Additional Directors of the Company with effect from 25thApril, 2017. Further, the Board has also appointed Shri Subhash Mago as Whole Time Director of the Company designated asWhole Time Director & Chief Executive Officer for a period from 25th April, 2017 to 31st March, 2020. Shri Jejurikar and ShriMago hold office upto the date of the forthcoming Annual General Meeting. The Company has received notices under Section160 of the Companies Act, 2013 from Member signifying intention to propose Shri Rajesh Jejurikar and Shri Subhash Mago forthe office of Director at the forthcoming Annual General Meeting.

http://www.swarajenterprise.com/


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All the Independent Directors of the Company have submitted declaration under Section 149(7) of the Companies Act, 2013that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in thecircumstances which may affect their status as Independent Director during the year.

In terms of Section 152 of the Companies Act, 2013, Shri S. Durgashankar and Dr. Pawan Goenka shall retire by rotation at theforthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015, a system has been put in place to carry out performance evaluation of the Board, its Committees and individual Directors.Criteria for performance evaluation is covered in the Corporate Governance Report.

Remuneration Policy

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy on appointment ofDirectors and Senior Management and their remuneration. The Remuneration Policy is covered in the Corporate GovernanceReport.

Board Meetings and Annual General Meeting

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, four Meetings of Board and fourmeetings of the Audit Committee were convened and held. The details are covered in the Corporate Governance Report. Theintervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

The Independent Directors of the Company meet at least once in every financial year without the presence of Non-IndependentDirectors, Executive Director and any other management personnel. The meeting(s) is conducted in a manner to enable theIndependent Directors to discuss matter pertaining to, inter alia, review of performance of Non-Independent Directors and theBoard as a whole, assess the quality, quantity and timeliness of flow of information between the Company's management andthe Board that is necessary for the Board to effectively and reasonably perform their duties. During the year, one meeting ofIndependent Directors was held on 28th November, 2016.

The 30th Annual General Meeting of the Company was held on 26th July, 2016.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on representations received from the OperatingManagement, and after due enquiry, confirm that:

a) in the preparation of Annual Accounts for the financial year ended 31st March, 2017, the applicable accounting standardshave been followed;

b) in the selection of accounting policies, consulted the Statutory Auditors and applied them consistently, and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company asat 31st March, 2017 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with theprovisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraudand irregularities;

d) the Annual Accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the Company have been laid down, which are adequate and operating effectively;

f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems areadequate and operating effectively.

Audit Committee

The Audit Committee currently comprises of the following Directors viz. Shri Dileep C. Choksi (Chairman of the Committee),Dr. T.N. Kapoor, Shri S. Durgashankar and Smt. Neera Saggi. Except Shri S. Durgashankar, all the Members are Independent


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Directors. All the Members of the Committee possess strong accounting and financial management knowledge. The CompanySecretary of the Company is the Secretary of the Committee.

All the recommendations of the Audit Committee were accepted by the Board.

F. CORPORATE GOVERNANCE

Corporate Governance

A Report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance ofconditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations,2015 forms part of the Annual Report.

Vigil Mechanism/Whistle Blower Policy

The Company has a vigil mechanism through Whistle Blower Policy to deal with instance of fraud and mismanagement, if any.The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has put in place anti sexual harassment policy in line with the requirements of the Sexual Harassment of Womenat Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy is gender neutral. Internal complaints committeehas been set up to redress complaints received, if any, regarding sexual harassment. During the year, no complaint wasreceived.

Risk Management

Pursuant to the requirement of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, theCompany is having Risk Management framework covering identification, evaluation and control measures to mitigate theidentified business risks.

G. EMPLOYEES

Key Managerial Personnel (KMP)

The following have been designated as the Key Managerial Personnel of the Company pursuant to Sections 2(51) and 203 ofthe Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Shri M.N. Kaushal, Whole Time Director (ceased w.e.f. 1st April, 2017)

Shri Subhash Mago, Chief Executive Officer (appointed w.e.f. 1st October, 2016)

Shri M.S. Grewal, Company Secretary

Shri Rajinder Arora, Chief Financial Officer

Employees' Stock Option Scheme

The Nomination and Remuneration Committee of the Board of the Directors of the Company, inter alia, administers andmonitors the Employees' Stock Option Scheme-2015 ("the Scheme") of the Company. The Scheme is in compliance with SEBI(Share Based Employee Benefits) Regulations, 2014 and there have been no change in the said Scheme during the year.Pursuant to the said Scheme, the Nomination and Remuneration Committee during FY 2015-16 have granted 9389 options toeligible employees which will become due for exercise from FY 2017-18 onwards.

Industrial Relations

Industrial relations remained cordial throughout the year under review.

Particulars of Employees

The information required pursuant to Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules, 2014 is annexed herewith as “Annexure B”. Futher, there was no employee who was in receipt ofremuneration of not less than Rs. 1,02,00,000 during the year ended 31st March, 2017 or not less than Rs. 8,50,000 per monthduring any part of the year.


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Safety, Health and Environmental Performance

Your Company's commitment towards Safety, Occupational Health and Environment is being continuously enhanced. TheCompany encourages involvement of all its employees in activities related to safety, including promotion of safety standards.This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational Health andEnvironmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with allstatutory rules and regulations on regular basis. During the year, no major accident has occurred. Your Company also impartstraining to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legalrequirement and promotes eco-friendly activities. Showing its commitment to improve the well-being of its employees, MedicalCheck-ups, both curative and preventive have been organized regularly, including educating the employees on IndustrialHygiene at the work place. The Company's plant is certified under OHSAS 18001:2007 and EMS ISO 14001:2004.

H. AUDITORS

Statutory Auditors and Auditors' Report

M/s Davinder S. Jaaj & Company, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion ofthe ensuing Annual General Meeting. Pursuant to Section 139 of the Companies Act, 2013, the Board of Directors on therecommendation of Audit Committee has appointed M/s B.K. Khare & Co., Chartered Accountants (ICAI FRN 105102W), asthe Statutory Auditors of the Company to hold office from the conclusion of the forthcoming Annual General Meeting (AGM),until the conclusion of the fifth consecutive AGM of the Company (subject to ratification of their appointment by the Membersat every AGM held after the ensuing AGM). M/s B.K. Khare & Co. have confirmed that their appointment, if approved, will bewithin the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from disqualificationspecified under Section 141(3) of the Companies Act, 2013. The Members are requested to appoint Auditors and fix theirremuneration.

The Audit Report issued by the Auditors of the Company forms part of the Annual Report and does not contain any qualification,reservation or adverse remark.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules, 2014, the Company has appointed M/s A. Arora & Co., Company Secretaries in practice (CP No. 993) toundertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure C". TheSecretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Auditors

Pursuant to Section 148(3) of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules,2014, the Board of Directors on the recommendation of Audit Committee has appointed M/s V. Kumar & Associates, CostAccountants, as the Cost Auditors of the Company for the financial year ending on 31st March, 2018. M/s V. Kumar &Associates have confirmed that their appointment, if approved, will be within the limits of Section 141(3)(g) of the CompaniesAct, 2013 and have also certified that they are free from disqualification specified under Section 141(3) of the Companies Act,2013. The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arm’slength relationship with the Company. As per the provisions of the Companies Act, 2013, the remuneration payable to the CostAuditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seekingMembers ratification for the remuneration payable to M/s V. Kumar & Associates, Cost Accountants is included in the Noticeconvening the Annual General Meeting.

I. CORPORATE SOCIAL RESPONSIBILITY AND RELATED MATTERS

Corporate Social Responsibility

Keeping with Company's core value of Good Corporate Citizenship, your Company is committed to its social responsibility bytaking various initiatives which would benefit the society at large. During the year, your Company took initiatives to provideventilator/life saving equipments to Pediatrics Intensive Care Unit (PICU) at PGIMER, Chandigarh, support for the education ofspecial children by providing laptops to SOREM - an NGO promoted by the Govt. and dedicated to the cause of children withMental Retardation, Cerebral Palsy and Autism, provided three hearse vans for use at PGIMER, Chandigarh and also upgraded


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infrastructure of Govt. School adopted by your Company at village Kambali. Further, your Company continued its effortstowards girl education, tree plantation at various locations, organizing medical camps, celebration of festivals with under-privileged, public awareness camps for road safety and pollution etc. Your Company continued its support to the two nearbyvillages adopted under Swaraj Engines Swachh Bharat Integrated Sanitation Programme. The Company has also contributedRs. 50 lacs to the Prime Minister National Relief Fund.

Further, in compliance with Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social ResponsibilityPolicy) Rules, 2014, the Company's Corporate Social Responsibility (CSR) Committee during the year comprised of Shri SudhirMankad (Chairman) and S/Shri Vijay Varma, Rajan Wadhera and M.N. Kaushal as other members. Consequent to changes inthe Board of Directors, the Committee has been reconstituted with effect from 25th April, 2017 by inducting Shri RajeshJejurikar and Shri Subhash Mago as Members in place of Shri Rajan Wadhera and Shri M.N. Kaushal. The Annual Report onCSR activities is annexed herewith as "Annexure D".

Sustainability Initiative

Your Company is conscious of its responsibility towards preservation of natural resources and continuously taking variousinitiatives to reduce the consumption of electricity and water.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars in respect of the above activities stipulated under Section 134(3)(m) of the Companies Act 2013, read with Rule 8of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure E".

J. SECRETARIAL

Share Capital

The Issued and Paid-up Share Capital of the Company remained unchanged during the year and stood at Rs.12.42 crores at theend of the financial year 2016-17.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure F".

Particulars of Loans, Guarantees and Investments

During the year under review, the Company has not extended any loans, given guarantees or provided securities and madeinvestment pursuant to Section 186 of the Companies Act, 2013.

Deposits

The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 andthe Companies (Acceptance of Deposits) Rules, 2014.

The Company has not made any loans/advances and investment in its own shares, associates, etc. during the year.

General

The Company is not paying any commission to the Whole Time Director(s). However, Whole Time Director(s) is eligible forgrant of Stock Options of the Company, subject to approval of the Nomination and Remuneration Committee.

The Company has no holding/subsidiary company.

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions /events happened on these items during the year under review:

1. issue of equity shares with differential voting rights or sweat equity.

2. significant or material orders passed by the Regulators / Courts / Tribunal which impact the going concern status of theCompany and its future operations.

3. voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase forwhich loan was given by the Company (as there is no scheme pursuant to which such person can beneficially hold sharesas envisaged under Section 67(3)(c) of the Companies Act, 2013).

4. fraud reporting by the auditors.


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ACKNOWLEDGEMENTS

Your Directors take this opportunity to acknowledge the contributions of all the stakeholders and are grateful for the co-operation of various Government Authorities, excellent support received from the Shareholders, Banks and other BusinessAssociates. The Directors also recognise and appreciate the hard work and efforts put in by all the employees and theircontinued contribution to the Company.

FOR AND ON BEHALF OF THE BOARD

Place : Mumbai (SUDHIR MANKAD)Date : 25th April, 2017 Chairman


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Reflecting the above, the Operating Profit (EBITDA) margin improved by 170 basis points over previous year. Profitbefore tax for the year stood at Rs. 105.46 crores (previous year - Rs. 76.21 crores). While profit after tax (excluding othercomprehensive income) was Rs. 68.83 crores (previous year - Rs. 51.31 crores), the total comprehensive income (net oftax) stood at Rs. 69.03 crores against previous year's Rs. 51.20 crores.

B) Balance Sheet

Equity

The Company's net worth on 31st March, 2017 stood at Rs. 283.37 crores comprising of an Equity Share Capital componentof Rs. 12.42 crores and Other Equity of Rs. 270.95 crores - a book value of Rs.228 per share (previous year - Rs. 212 pershare). Out of the total equity of Rs. 12.42 crores, 83% (Rs.10.35 crores) represents two Bonus Issues made in 1997 (1:1)and 2005 (2:1).

Non Current Assets

Out of the total non-current assets of Rs. 95.93 crores (previous year - Rs. 106.25 crores), 95% is represented byproperty, plant and equipment (including capital work in progress).

Inventories

With continued focus on optimising inventory levels, coupled with higher activity levels, total year-end inventories of Rs.26.08 crores (previous year - Rs. 27.75 crores) came down to 14 days of net operating revenue from previous year's levelof 19 days.

Trade Receivables

Year-end trade receivables of Rs. 13.07 crores (previous year - Rs. 7.49 crores) in terms of number of days stood at 7days of net operating revenue (previous year - 5 days).

Trade Payables

With increased production level, year-end total trade payables stood at Rs. 70.13 crores (previous year - Rs. 54.01crores).

Core Working Capital

With overall focus on all components of core working capital viz. inventories, trade receivables and trade payables, thesame as on 31st March, 2017 has improved by 4 days over previous year.

INTERNAL CONTROL SYSTEM AND ADEQUACY

There are established procedures for internal control on a Company-wide basis. Policies and procedures have been laid downto provide reasonable assurances that assets are safeguarded from risks of unauthorised use / disposition and transactions arerecorded and reported with proprietary, accuracy and speed. These aspects are regularly reviewed during internal audit andstatutory audits. The Company has also laid down adequate internal financial controls. During the year, such controls weretested and no material weakness in their operating effectiveness was observed. Finance and Accounts function is well staffedwith experienced and qualified personnel. This team participates in the preparation & monitoring of budgets. Internal AuditReports are reviewed by the Audit Committee of the Board from time to time.

HUMAN RESOURCES

The Company continued with its practice of a lean organisation manned by involved and motivated employees with teamorientation. The atmosphere encourages learning and informal communication.

The Company is having Performance Management System (PMS) to objectively measure the performance of the individualand the organization. The overall remuneration structure is linked with PMS.

To further increase the competence level of the employees, systematic and structured training is provided at different levels.Such trainings cover aspect related to leadership development, communication effectiveness and team building etc. This hasmade a significant contribution to the Company's business.


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CORPORATE GOVERNANCE REPORTI Company's philosophy on Code of Governance

Swaraj Engines Ltd. (SEL) has been practicing the principles of good corporate governance, disclosure and transparencyright from its incorporation. It has been a core belief and practice with the Company to consider itself as the custodianand trustee of all the constituencies of its businesses - customers, business associates, shareholders and society. SELhas sought and will continue to seek corporate excellence and profits through ethics, passion and perseverance.

A report on compliance with the Code of Corporate Governance as prescribed in Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") is given below:

II Board of Directors

The Composition of the Board is in accordance with the Listing Regulations. The Company has a Non-Executive Chairmanand the number of Independent Directors is 1/3rd of the total number of Directors. The number of Non-Executive Directorsis more than one half of the total number of Directors. The Non-Executive Directors bring wide range of experience andindependent judgement to the Board's deliberations and decisions. While during the year Shri M.N. Kaushal was the WholeTime Director of the Company, the Board, upon completion of his tenure on 31st March, 2017, has appointed Shri SubhashMago as Whole Time Director & Chief Executive Officer with effect from 25th April, 2017.

Dr. Pawan Goenka, Shri Rajan Wadhera (ceased to be a Director w.e.f. 24th April, 2017), Shri S. Durgashankar and ShriRajesh Jejurikar (co-opted w.e.f. from 25th April, 2017), Non-Executive Directors, are in the whole-time employment ofMahindra & Mahindra Ltd. Shri R.R. Deshpande, Non-Executive Director, is in the whole-time employment of KirloskarOil Engines Ltd. These Non-Executive Directors draw remuneration from their respective companies. Shri Vijay Varma,Non-Executive Director, is also associated with Kirloskar Group. Mahindra & Mahindra Ltd. and Kirloskar Industries Ltd.are the promoters of the Company.

Apart from the above and the reimbursement of expenses incurred in discharge of their duties and the remuneration thatsome of the Non-Executive Directors would be entitled to under the Companies Act, 2013, none of the Directors has anyother material pecuniary relationship or transactions with the Company, its Promoters, its Directors, its Senior Managementand associates which in their judgement would affect their independence. The Directors of the Company are not interserelated to each other.

The primary role of the Board is that of trusteeship, to protect and enhance shareholders' value through strategicsupervision of Company's operations. The Board also provides direction and exercises appropriate control to ensure thatthe Company fulfils the stakeholders' aspirations and societal expectations.

A. Composition of the Board

The Company's Board of Directors currently comprises of 10 members. While five members are Non-IndependentNon-Executive Directors, the Whole Time Director is the Executive Director of the Company and remaining four(including the Chairman of the Board) are Independent Directors.

The information on Composition of the Board, number of Board Meetings, attendance of Directors at Board Meetings/Annual General Meeting, Directorships and Committee positions held in Public companies is given below:

Non-Executive

Shri Sudhir Mankad, Independent 4 4 Yes 9 1 5Chairman

Dr. Pawan Goenka Non- 4 3 Yes 7 – 1Independent

Name of Director Category Financial Year Attendance Total No. of Committee+

2016-17 at the Directorships^ Position held inlast AGM in public public companies#

Board Board companies#

Meetings Meetings Chairman Memberheld attended


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During the financial year 2016-17, 4 Board Meetings were held on 26th April, 2016, 26th July, 2016, 24th October, 2016and 24th January, 2017. The gap between two Meetings did not exceed four months.

The 30th Annual General Meeting (AGM) was held on 26th July, 2016.

C. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the Listing Regulations, a system has been put in place tocarry out performance evaluation of the Board, its Committees and individual directors. An appraisal format has beendevised covering various aspects of the Board's functioning such as adequacy of composition of the Board and itsCommittees, Board process, culture and accountability etc. Similarly, a separate format is also formulated for carryingout evaluation of the performance of individual Directors including the Chairman of the Board, which inter alia includeparameters such as level of engagement and contribution, understanding of industry and global trends, and independenceof judgement etc.

D. Directors Profile

The brief profile of the Company's Board of Directors is given below:

Shri Sudhir Mankad

Shri Sudhir Mankad joined the Company's Board in July, 2012.

Shri Mankad belongs to Indian Administrative Services (IAS). He holds Masters' degree in History from University ofDelhi. He has served in various capacities both in Government of India and the State of Gujarat. His last assignmentwas as Chief Secretary, Govt. of Gujarat. He has served as a Chairman / Director on Board of several cement, power,fertilizer and finance companies. He had also worked on the Finance Committee of Central Universities and had beenassociated with several educational institutions and NGOs. Shri Mankad has also been appointed as Part Time Non-Executive Director on the Central Board of Reserve Bank of India from March'16.

Shri Mankad is also a Chairman of Gujarat International Finance Tec-city Co. Limited and Director of Deepak NitriteLimited, Gruh Finance Limited, Mahindra Intertrade Limited, National Securities Depository Limited, IL&FS SkillsDevelopment Corp. Limited, Navin Fluorine International Limited and IL&FS Education & Technology Services Limited.

The details of Shri Mankad's Membership in Committees are given below :

S.No. Name of the Company Name of Committee Position Held

1. Deepak Nitrite Limited Audit Committee Member

Nomination and Remuneration ChairmanCommitteeCorporate Social Responsibility ChairmanCommittee

2. Gruh Finance Limited Nomination and Remuneration ChairmanCommitteeCorporate Social Responsibility MemberCommitteeStakeholders Relationship MemberCommittee

3. Mahindra Intertrade Limited Audit Committee ChairmanCorporate Social Responsibility MemberCommitteeNomination and Remuneration MemberCommittee

4. National Securities Depository Limited Audit Committee MemberCorporate Social Responsibility MemberCommitteeNomination and Remuneration MemberCommittee

5. IL&FS Skills Development Corp. Limited Audit Committee Member


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6. Navin Fluorine International Limited Corporate Social Responsibility ChairmanCommittee

7. IL&FS Education & Technology Services Audit Committee MemberLimited

8. Swaraj Engines Limited Nomination and Remuneration MemberCommittee

Corporate Social Responsibility ChairmanCommittee

Shri Mankad does not hold any shares in the Company.

Dr. Pawan Goenka

Dr. Pawan Goenka is on the Board of the Company since May 2010.

Dr. Goenka is a Mechanical Engineer from I.I.T. Kanpur. Post his Engineering degree, he earned his Ph.D from CornellUniversity, U.S.A. He is also a graduate of the Harvard Business School, Advanced Management Program. Dr. Goenkais currently the Managing Director of Mahindra & Mahindra Limited (M&M). Having joined M&M in 1993, in April, 2003 hewas appointed COO of Automotive Sector, in September 2005, he became President, and in April, 2010 he assumedresponsibility for both the Automotive and Farm Equipment Sectors. He was appointed to the post of Executive Directorof Mahindra & Mahindra Ltd. in 2013. Prior to joining M&M, he served with General Motors R&D Centre at Detroit, U.S.A.He is an internationally acknowledged scientist-manager with several citations to his credit. He is a fellow of SAEInternational and the Indian National Academy of Engineers. In 2014, he was appointed Chairman of the Board ofGovernors at the Indian Institute of Technology (IIT), Madras.

Dr. Goenka is also the Chairman of Mahindra Vehicle Manufacturers Limited, SsangYong Motor Company Limited,Mahindra & Mahindra South Africa (Pty) Limited, Mahindra USA Inc., Mahindra Racing U.K. Limited, Mitsubishi MahindraAgricultural Machinery Co. Limited, Mahindra Electric Mobility Limited, Mahindra Agri Solutions Limited and MahindraAutomotive North America Inc. and Director of Mahindra First Choice Wheels Limited, Mahindra Two Wheelers Limitedand Mahindra Yueda (Yancheng) Tractor Co. Limited.

The details of Dr. Goenka's Membership in Committees are given below:


1. Mahindra & Mahindra Limited Corporate Social Responsibility MemberCommittee

Loans & Investment Committee Member

Stakeholders Relationship Committee Member

Research & Development Committee Member

Sale of Assets Committee Member

Risk Management Committee Chairman

2. Mahindra Vehicle Manufacturers Limited CSR Committee Member

Nomination and Remuneration MemberCommittee

Strategic Investments Committee Chairman



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3. SsangYong Motor Company Limited Management Committee Chairman

Outside Director CandidateRecommendation Committee Member

4. Swaraj Engines Limited Nomination and Remuneration MemberCommittee

5. Mahindra Electric Mobility Limited Nomination and Remuneration MemberCommittee

6. Mahindra Agri Solutions Limited Nomination and Remuneration Member

Committee

Dr. Goenka does not hold any shares in the Company.

Dr. T.N. Kapoor

Dr. T.N.Kapoor has been a Director of the Company since 1998.

Dr. Kapoor possesses a Master's degree in Commerce, a Bachelor's degree in Law and a Doctorate in Philosophy. Heis an eminent Educationist and has been Professor and Dean, Faculty of Business Management & Commerce in PanjabUniversity. He is a Management Advisor and is associated with several Public Limited Companies. He is also a Directorof Omax Autos Limited and Sterling Tools Limited.

The details of Dr. Kapoor's Membership in Committees are given below :


1. Omax Autos Limited Stakeholders Relationship Committee Chairman

Audit Committee Member


Corporate Social Responsibility MemberCommittee

Executive Committee Chairman

2. Sterling Tools Limited Audit Committee Member

Stakeholders Relationship Committee Chairman


3. Swaraj Engines Limited Audit Committee Member

Stakeholders Relationship Committee Chairman

Nomination and Remuneration ChairmanCommittee

Dr. Kapoor does not hold any shares in the Company.



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Shri R.R. Deshpande

Shri R.R. Deshpande is on the Board of the Company since January, 2008.

Shri Deshpande, a Mechanical Engineer, is currently Joint Managing Director, Kirloskar Oil Engines Limited (KOEL). Heis working with Kirloskar Group since 1977 and has vast experience in Projects, Production and Material Services.

The details of Shri Deshpande's Membership in Committees are given below :


1. Kirloskar Oil Engines Limited Stakeholders Relationship Committee Member

Shri Deshpande does not hold any shares in the Company.

Shri Vijay Varma

Shri Vijay Varma has been a Director of the Company since January, 2009.

Shri. Varma, a Mechanical Engineer from College of Engineering, Pune, served with Kirloskar Oil Engines Limited andhad held key positions in domestic and export marketing & sales, setting up power plant, heading business to generateand sell power, managing projects in strategy development, process engineering and information technology. He wasalso involved in negotiating, setting up and closing technology transfers and joint ventures, acquisitions of businessesand general management.

His last assignment in Kirloskar Group was as Managing Director & President of Kirloskar Proprietary Ltd. to manage,promote and protect brands and trademarks owned and used by Kirloskar Group.

Since 2010, Shri Varma chairs Indian Diesel Manufacturers' Association (IDEMA), and is also promoter and managingcommittee member of International Internal Combustion Engine Manufacturers' Association (IICEMA).

The details of Shri Varma's Membership in Committees are given below:


1. Swaraj Engines Limited Corporate Social Responsibility MemberCommittee

Shri Varma does not hold any shares in the Company.

Shri S. Durgashankar

Shri S. Durgashankar joined the Company's Board in June, 2014.

Shri S. Durgashankar, a Chartered Accountant, is currently President - Group Merger & Acquisitions (M&A), CorporateAccounts and Group Secretarial and Member of the Group Executive Board at Mahindra & Mahindra Ltd. (M&M). Duringhis overall work experience of 30+ years, he has handled a wide spectrum of Corporate Finance assignments at seniorlevels. At M&M, he was instrumental in setting up the M&A division and has a rich M&A experience, having facilitatedmany domestic & international M&A transactions for the Mahindra Group. He was earlier Corporate Treasurer and Headof Treasury & Investor Relations at M&M. Prior to his current assignment, he was CFO of Mahindra Satyam.

Shri Durgashankar is also a Director of Mahindra Integrated Business Solutions Pvt. Limited, EPC Industrie Limited,Mahindra Vehicles Manufacturers Limited, Mahindra eMarket Limited, Mahindra Namaste Limited, Mitsubishi MahindraAgricultural Machinery Co. Limited and Mahindra HZPC Pvt. Limited.


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The details of Shri Durgashankar's Membership in Committees are given below:


1. EPC Industrie Limited Audit Committee Member



2. Mahindra Vehicle Manufacturers Limited Audit Committee Member

Committee of Strategic Investments Member


Shri Durgashankar does not hold any shares in the Company.

Shri Dileep C. Choksi

Shri Dileep C. Choksi joined the Company's Board in June, 2014.

Shri Dileep C. Choksi, a Chartered Accountant by profession, has over 38 years of experience having qualified as aLawyer and a Cost Accountant. He was the former Joint Managing Partner of Deloitte in India before setting up ofC.C. Chokshi Advisors Pvt. Ltd. His areas of specialization include tax planning and structuring for domestic andinternational clients, including expatriates, finalizing collaborations and joint ventures, executive advisory and decisionsupport, corporate restructuring with a focus on start-up, turnaround and change management strategies and analyzingtax impact of various instruments.

Shri Choksi is also a Director of ICICI Bank Limited, ICICI Home Finance Co. Limited, Lupin Limited, HexawareTechnologies Limited, AIA Engineering Limited, Arvind Limited, Tata Housing Development Co. Limited, MafatlalCipherspace Pvt. Limited, Miramac Properties Pvt. Limited and Vardan Ceqube Advisors Pvt. Limited.

The details of Shri Choksi's Membership in Committees are given below :


1. ICICI Bank Limited Audit Committee Member

Fraud Monitoring Committee Member

Risk Committee Member

Review Committee for identification Memberof wilful defaulters/non co-operativeborrowers

2. ICICI Home Finance Co. Limited Audit & Risk Management Committee Chairman

Nomination and Remuneration ChairmanCommittee


Management Committee Member

3. Lupin Limited Audit Committee Member


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4. Hexaware Technologies Limited Audit, Governance & Compliance ChairmanCommittee

Shareholders Relationship Committee Member

5. Arvind Limited Audit Committee Chairman


6. Tata Housing Development Co. Limited Audit Committee Member


7. Swaraj Engines Limited Audit Committee Chairman

Shri Choksi does not hold any shares in the Company.

Smt. Neera Saggi

Smt. Neera Saggi joined the Company's Board in October, 2014.

Smt. Neera Saggi, Master in English Literature and an MBA, joined the Indian Administrative Service in 1980 and beforetaking a voluntary retirement in 2008, she served in various capacities both in Government of India and State of WestBengal. Besides other assignments, she was District Magistrate and Collector, Hooghly, West Bengal, Deputy Chairpersonof the Jawaharlal Nehru Port Trust, Secretary to Governor of West Bengal, CMD of Hindustan Diamond Company Pvt.Limited and Development Commissioner of Special Economic Zones, Ministry of Commerce, Govt. of India. Smt.Saggi's last assignment was Chief Executive of L&T Seawoods Pvt. Ltd.

Smt. Saggi is also Director of Tata Projects Limited, TRF Limited, Tata Consulting Engineers Limited, Tata Realty andInfrastructure Limited, Maithon Power Limited, Mahindra Heavy Engines Limited, GE Power India Limited and GE T&DIndia Limited.

The details of Smt. Saggi's Membership in Committees are given below :


1. Tata Projects Limited Audit Committee Member



2. TRF Limited Audit Committee Member


3. Tata Consulting Engineers Limited Audit Committee Member





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4. Tata Realty and Infrastructure Limited Audit Committee Member



5. Maithon Power Limited Audit Committee Member



7. Mahindra Heavy Engines Limited Audit Committee Chairman


Smt. Saggi does not hold any shares in the Company.

Shri Rajesh Jejurikar

Shri Rajesh Jejurikar has joined the Company's Board as an Additional Director with effect from 25th April, 2017.

Shri Jejurikar holds degree in Economics and Statistics from Mumbai University. A 1986 batch MBA from S.P. JainInstitute of Management, Shri Jejurikar has attended the Advanced Management Program at The Wharton School,University of Pennsylvania and was awarded the British Chevening Scholarship to study at the Manchester BusinessSchool, UK. Shri Jejurikar joined the Automotive Sector of Mahindra & Mahindra Ltd. as Vice-President - Marketing in2000 and over the years, he moved from being an Executive Vice-President - Sales & Marketing to Managing Director,Mahindra Renault and Chief of Operations of the Automotive Division. In 2010, Shri Jejurikar was appointed ChiefExecutive for the Automotive Division and Member of the Group Executive Board. Shri Jejurikar, after having a shortstint in the media industry, rejoined M&M in 2013 and is currently President of Farm Equipment Sector (FES) and aMember of the Group Executive Board of Mahindra & Mahindra Limited. He also oversees the Mahindra Two Wheelersbusiness. Mahindra Two Wheelers Ltd. owns 51% stake in Peugeot Motocycles, the oldest motorized two-wheelermanufacturer in the world.

Shri Jejurikar is the current President of the Tractor Manufacturers Association (TMA). He is a visiting faculty atS.P. Jain Institute of Management and is on their Governing Body. He also has an honorary position on the EnactusIndia National Advisory Board.

Shri Jejurikar was also on the Board of Swaraj Engines Limited from April, 2013 to April, 2014.

Shri Jejurikar is also Chairman of Trringo.com Limited, Peugeot Motocycle SAS, Hisarlar Makine Sanayi ve TicaretAnonim Sirketi and Hisarlar Ithalat Ihracat Pazarlama Anonim Sirketi and Director of Mahindra Gujarat Tractor Limited,Mahindra Two Wheelers Limited, Mahindra First Choice Wheels Limited, Mahindra USA Inc., Mahindra Two WheelersEurope Holdings S.a r.l., Mahindra Racing SRL (Italy) and Mitsubishi Mahindra Agricultural Machinery Co. Limited.



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The details of Shri Jejurikar's Membership in Committees are given below :


1. Mahindra Gujarat Tractor Limited Nomination and Remuneration MemberCommittee

2. Mahindra Two Wheelers Limited Nomination and Remuneration ChairmanCommittee

3. Peugeot Motocycle SAS Nomination and Compensation MemberCommittee

Strategy and Synergies Committee Chairman

Audit and Finance Committee Member

4. Swaraj Engines Limited Stakeholders Relationship Committee Member


Shri Jejurikar does not hold any shares in the Company.

Shri Subhash Mago

Shri Subhash Mago has joined the Company's Board as an Additional Director with effect from 25th April, 2017 and hasbeen appointed as Whole Time Director & Chief Executive Officer for a period from 25th April, 2017 to 31st March, 2020.

Shri Mago, who is Chief Executive Officer of the Company with effect from 1st October, 2016, is a Bachelor of Engineeringfrom IIT, Roorkee and has more than 35 years experience in Purchasing, Manufacturing, Quality Systems, ComponentDevelopment, Supply Chain Management, Value Engineering and New Product Development. After working for 17 yearsin Maruti Udyog Ltd., he joined Mahindra & Mahindra Ltd. (M&M) in 2000 and since then has worked on many strategicassignments. His last assignment in M&M was Senior Vice-President of Farm Division - Component Development &Material Management (CDMM).

The details of Shri Mago's Membership in Committees are given below :


1. Swaraj Engines Limited Stakeholders Relationship MemberCommittee


Shri Mago does not hold any shares in the Company.

III Committees of the Board

A. Audit Committee

The Audit Committee currently comprises of the following Non-Executive Directors of which three are Independent,including the Chairman of the Committee:

– Shri Dileep C. Choksi, Chairman

– Dr. T.N. Kapoor

– Shri S. Durgashankar

– Smt. Neera Saggi


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All the Members of the Committee have vast experience and knowledge of corporate affairs & financial managementand possess accounting and financial management expertise.

The role, terms of reference and the authority and powers of this Committee are in conformity with the requirements ofthe Companies Act, 2013 and the Listing Regulations. The functions of the Audit Committee inter alia include review ofsystems and procedures, overseeing the functioning of internal audit, the effectiveness of internal controls and regulatorycompliances. It also reviews Company's financial reporting process, disclosure of financial information, observations ofauditors and recommends the appointment of statutory auditors, their fees and reviews quarterly / annual financialstatements before submission to the Board. It is also empowered to inter alia review Management Discussion andAnalysis of financial condition, results of operations and related party transactions. Generally, all items listed in Regulation18(3) of the Listing Regulations are covered in the terms of reference. The Audit Committee has been granted powers asprescribed under Regulation 18(2)(c) of the Listing Regulations. The meetings of the Audit Committee are also attendedby the Whole-time Director, the Statutory Auditors, the Internal Auditor and the Company Secretary besides other seniorfunctionaries of the Company as and when required.

The Company Secretary acts as the Secretary to the Committee.

Shri Dileep C. Choksi, the Chairman of the Audit Committee, attended the last Annual General Meeting held on 26thJuly, 2016.

During the financial year under review, 4 meetings of Audit Committee of the Board were held on 26th April, 2016, 26thJuly, 2016, 24th October, 2016 and 24th January, 2017. The gap between the two meetings did not exceed four months.

Attendance record of the Members of the Audit Committee for FY 2016-17 is as under:

Name of the Member Director No. of Meetings Held No. of Meetings Attended

Shri Dileep C. Choksi 4 3

Dr. T.N. Kapoor 4 4

Shri S. Durgashankar 4 1

Smt. Neera Saggi 4 4

B. Stakeholders Relationship Committee

The Stakeholders Relationship Committee functions under the Chairmanship of Dr. T.N. Kapoor, Non-ExecutiveIndependent Director and presently comprises the following Directors:

– Dr. T.N. Kapoor, Chairman

– Shri Rajesh Jejurikar(co-opted w.e.f. 25.04.2017)

– Shri Subhash Mago(co-opted w.e.f. 25.04.2017)

Consequent upon his resignation from the Directorship of the Company, Shri Rajan Wadhera ceased to be a Member ofthe Committee w.e.f. 24.04.2017. Further, upon completion of his tenure as Whole Time Director, Shri M.N. Kaushalalso ceased to be a Member of the Committee w.e.f. 01.04.2017.

Shri M.S. Grewal, Company Secretary, is the Compliance Officer of the Company.

The Committee meets at periodic intervals, to approve inter alia, transfer/transmission of shares, issue of duplicateshare certificates and review status of investors' grievances and the functioning of the Share Department / Registrar &Share Transfer Agents in order to render effective and quality services to investors.

During the financial year under review, 4 meetings of Stakeholders Relationship Committee were held on 26th April,2016, 26th July, 2016, 24th October, 2016 and 24th January, 2017.


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Attendance record of the Members of the Stakeholders Relationship Committee for FY 2016-17 is as under:


Dr. T.N. Kapoor 4 4

Shri Rajan Wadhera 4 4(ceased to be a Member w.e.f. 24.04.2017)

Shri M.N. Kaushal 4 4(ceased to be a Member w.e.f. 01.04.2017)

The Company had received 121 enquiries/complaints from the shareholders and all of them have been attended /resolved.

As on date, there are no shares pending for transfer received during the year under review.

C. Nomination and Remuneration Committee

The Nomination and Remuneration Committee presently comprises of following three Non-Executive Directors of whichtwo are Independent, including the Chairman of the Committee:

– Dr. T.N. Kapoor, Chairman

– Shri Sudhir Mankad

– Dr. Pawan Goenka

The purpose of the Committee inter alia include identification and selection of persons who may be appointed asdirectors / independent director(s) or as key managerial personnel or in senior management based on certain laid downcriteria, formulate policy relating to the remuneration for the directors, key managerial personnel and other employees,to decide on the stock options to be granted, if any, to the eligible employees, directors including non-executive directors;formulation of process for evaluation of directors performance; and to deal with such other matters and functions asmay be prescribed from time to time.

During the financial year, 1 meeting of Nomination and Remuneration Committee of the Board was held on 26th July, 2016.

Attendance record of the Members of the Nomination and Remuneration Committee for FY 2016-17 is as under:


Dr. T.N. Kapoor 1 1

Shri Sudhir Mankad 1 1

Dr. Pawan Goenka 1 1

D. Corporate Social Responsibility Committee

The Corporate Social Responsibility (CSR) Committee currently comprises of the following four Directors with Non-Executive Independent Director as its Chairman:

– Shri Sudhir Mankad, Chairman

– Shri Vijay Varma

– Shri Rajesh Jejurikar(co-opted w.e.f. 25.04.2017)

– Shri Subhash Mago(co-opted w.e.f. 25.04.2017)


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Consequent upon his resignation from the Directorship of the Company, Shri Rajan Wadhera ceased to be a Member ofthe Committee w.e.f. 24.04.2017. Further, upon completion of his tenure as Whole Time Director, Shri M.N. Kaushalalso ceased to be a Member of the Committee w.e.f. 01.04.2017.

The role of the CSR Committee, inter alia, is to :

– formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy which shall indicate theactivities to be undertaken by the Company as specified in Schedule VII of the Act;

– recommend the amount of expenditure to be incurred on the CSR activities;

– monitor the CSR Policy of the Company from time to time.

During the financial year, 1 meeting of Corporate Social Responsibility Committee of the Board was held on 24thJanuary, 2017.

Attendance record of the Members of the Corporate Social Responsibility Committee for FY 2016-17 is as under :


Shri Sudhir Mankad 1 1

Shri Vijay Varma 1 1

Shri Rajan Wadhera 1 1(ceased to be a Member w.e.f. 24.04.2017)

Shri M.N. Kaushal 1 1(ceased to be a Member w.e.f. 01.04.2017)

IV Remuneration to Directors

Remuneration Policy

The key provisions of the policies related to selection and appointment of Directors and their remuneration are givenbelow:

a) Policy for Selection and appointment of Directors

i) Appointment of Directors

• The Nomination and Remuneration Committee (NRC) reviews and assesses Board composition andrecommends the appointment of new Directors as and when required. In evaluating the suitability ofindividual Board member with regard to qualifications, positive attributes and independence of director,the NRC takes into account the following criteria that:

1. All Board appointments are based on merit, in the context of the skills, experience, independenceand knowledge, for the Board as a whole to be effective.

2. Ability of the candidates to devote sufficient time and attention to his professional obligations asIndependent Director for informed and balanced decision making.

3. Adherence to the Code of Conduct and highest level of Corporate Governance in letter and in spiritby the Independent Directors.

• Based on recommendation of the NRC, the Board evaluates the candidature and decide on the selectionof the appropriate member.


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ii) Removal of Directors

If a Director is attracted with any disqualification as mentioned in any of the applicable Act, rules andregulations thereunder or due to non-adherence to the applicable policies of the Company, the NRC mayrecommend to the Board with reasons recorded in writing, removal of a Director subject to the compliance ofthe applicable statutory provisions.

iii) Succession Planning

The successors for the Independent Directors shall be identified by the NRC. In case of separation ofIndependent Directors due to resignation or otherwise, successor will be appointed at the earliest but not laterthan the immediate next Board meeting or three months from the date of such vacancy, whichever is later.

The successors for the Executive Director(s) shall be identified by the NRC from among the Senior Managementor through external source as the Board may deem fit. The NRC will accord due consideration for the expertiseand other criteria required for the successor.

The Board may also decide not to fill the vacancy caused at its discretion.

b) Policy for Remuneration to Directors

i) Non-Executive Directors including Independent Directors:

The Nomination and Remuneration Committee (NRC) shall decide the basis for determining the compensation,both Fixed and Variable, to the Non-Executive Directors, including Independent Directors, whether ascommission or otherwise. The NRC shall take into consideration various factors such as Director's participationin Board and Committee meetings during the year, other responsibilities undertaken, such as membership orchairmanship of committees, time spent in carrying out their duties, role and functions as envisaged inSchedule IV of the Companies Act, 2013 and the Listing Regulations and such other factors as the NRC mayconsider/deem fit for determining the compensation. The Board shall determine the compensation to Non-Executive Directors within the overall limits specified in the Shareholders resolution.

ii) Whole Time / Executive Director(s):

The remuneration to Whole Time / Executive Director(s) shall be recommended by NRC to the Board. Theremuneration consists of both fixed compensation and variable compensation and shall be paid as salary,commission, performance bonus, stock options (where applicable), perquisites and fringe benefits as approvedby the Board and within the overall limits specified in the Shareholders resolution. The revision in compensation,if any, will be determined annually by the NRC based on their performance.

Remuneration Details

Non-Executive Directors, other than representative Directors of M&M, are paid sitting fees for attending the meetings ofthe Board of Directors and Committees thereof within the prescribed limits as decided by the Board and reimbursementof expenses incurred for attending the Board and Committee Meetings. The existing sitting fees paid to Non-ExecutiveDirectors is as under:

– Rs. 50,000 for every Board Meeting

– Rs. 30,000 for every Committee(s) Meeting (other than Stakeholders Relationship Committee)

– Rs. 5,000 for every Stakeholders Relationship Committee Meeting

From the financial year 2011-12, the Board had also approved the payment of commission to Directors who are neitherin the Whole-time employment of the Company nor the Whole-time Director, Managing Director, Executive Director(s)and such of the remainder as may not desire to participate, upto one per cent per annum of the net profits of theCompany distributed in such proportions as the Board of Directors may decide from time to time, subject to a limit of onequarter per cent of the net profits of the financial year for each such Director.

The details of Directors' remuneration for FY 2016-17 is as follows:


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VI Means of Communication

a) In compliance with the requirements of the Listing Regulations, the Company regularly intimates quarterly un-audited as well as audited financial results to the Stock Exchanges immediately after they are taken on record bythe Board. These financial results are normally published in the leading financial / national / regional newspapers(Business Standard - Q1 to Q3 results, Financial Express - Q4 & full year results and Punjabi Tribune) and are alsodisplayed on the website of the Company www.swarajenterprise.com;

b) The official news releases are displayed on the Company's website www.swarajenterprise.com;

c) During the year ended 31st March, 2017, no presentations were made to institutional investors or analysts.

VII Shareholder Information

1. 31st Annual General Meeting

Date : 24th July, 2017

Time : 3.00 P.M.

Venue : Swaraj Engines Ltd., Plot No. 2, Industrial Phase IX,

S.A.S. Nagar (Mohali), Punjab - 160 062

2. Financial Calendar (tentative)

The Financial year covers the period from 1st April to 31st March.

Calendar for the Board Meetings to be held to review / approve the financial results of the Company for FY 2017-18 isgiven below:

• Quarter ending 30th June, 2017 Last week of July, 2017

• Half year ending 30th September, 2017 Third week of October, 2017

• Quarter ending 31st December, 2017 Last week of January, 2018

• Year ending 31st March, 2018 May, 2018

Note: The above schedules are indicative.

3. Dividend Payment

The dividend, if declared, shall be paid on and from 29th July, 2017.

4. Date of Book Closure

8th July, 2017 to 14th July, 2017 (both days inclusive)

5. Listing on Stock Exchanges

(i) BSE Ltd. (BSE)25th Floor, P.J. Towers, Dalal Street, Mumbai - 400001

(ii) National Stock Exchange of India Ltd. (NSE)Exchange Plaza, C-1, Block G, Bandra Kurla Complex,Bandra (East), Mumbai - 400051

Listing Fee for FY 2017-18 for both these stock exchanges has been paid.

6. Stock Code

(i) BSE Ltd. (BSE) : 500407

(ii) National Stock Exchange of India Ltd. (NSE) : SWARAJENG

7. CIN : L50210PB1985PLC006473

http://www.swarajenterprise.com;

http://www.swarajenterprise.com;


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8. Stock Price Data

Monthly (April 2016 - March 2017) High - Low Quotations of shares traded at BSE & National Stock Exchange are asunder:

Month BSE National Stock Exchange (NSE)

High Low High Low (Rs.) (Rs.) (Rs.) (Rs.)

April 2016 1175.00 844.25 1174.90 850.35

May 2016 1172.00 1079.75 1177.00 1078.80

June 2016 1207.90 1092.50 1206.00 1092.05

July 2016 1294.00 1110.00 1294.80 1102.15

August 2016 1176.50 1110.00 1181.05 1109.80

September 2016 1226.75 1140.00 1226.00 1138.00

October 2016 1425.00 1205.00 1428.00 1201.05

November 2016 1423.85 1214.80 1430.00 1250.00

December 2016 1431.00 1292.00 1397.30 1290.10

January 2017 1450.00 1290.00 1449.00 1280.05

February 2017 1452.05 1365.00 1451.00 1352.40

March 2017 1486.00 1322.00 1498.40 1316.00

9. Stock Price Performance

SEL Share Price performance relative to BSE Sensitive Index

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SEL Share Price performance relative to NSE Index (S&P CNX Nifty Index)

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10. Registrar and Transfer Agents

M/s MCS Share Transfer Agent Limited (MCS), F-65, 1st Floor, Okhla Industrial Area, Phase - I, New Delhi - 110 020 arethe Registrar and Share Transfer Agent for physical shares of the Company. MCS is also the depository interface of theCompany with both NSDL and CDSL.

Tel No. : 011 - 41406149

Fax No. : 011 - 41709881

Email address : [email protected]

Contact Person: Shri Amar Jit

Share Transfer & other Communication regarding Share Certificates, Dividends and Change of Address etc. may beaddressed to Registrar, M/s MCS Share Transfer Agent Limited or to the Share Department of the Company at itsRegistered Office at Phase IV, Industrial Area, S.A.S. Nagar (Mohali), Punjab - 160 055.

11. Transfer System for physical shares

Share transfers are being registered & returned within the stipulated timeline from the date of receipt, if the documentsare valid in all respects.

Total number of shares transferred during FY 2016-17 was 4160 (Previous Year 2300).

Against the opening balance of 5350 shares (21 folios) lying in Unclaimed Suspense Account, no claim was made duringthe year.

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12. Shareholding Pattern as on 31st March, 2017

Category of Shareholders No. of No. of % ofShareholders Shares held Holding

1 Promoters 2 62,86,417 50.622 Mutual Funds 18 14,91,670 12.013 Financial Institutions / Banks 2 1054 0.014 Insurance Companies 2 24,588 0.205 Foreign Institutional Investors 14 6,24,662 5.036 Bodies Corporate - Indian 324 4,15,115 3.347 NRIs 357 2,05,874 1.668 Indian Public 11,716 33,69,840 27.139 OCB 1 600 0.00

Total 12,436 1,24,19,820 100.00

13. Distribution Pattern of Shareholding as on 31st March, 2017

No. of Equity Shares held No. of Shareholders No. of Shares held

Numbers % Total Numbers % Total

1 - 500 11,084 89.13 8,76,022 7.05

501 - 1000 853 6.86 5,89,402 4.75

1001 - 5000 409 3.29 8,60,420 6.93

5001 - 10000 42 0.34 2,92,226 2.35

10001 - 50000 24 0.19 5,36,190 4.32

50001 & above 24 0.19 92,65,560 74.60

Total 12,436 100.00 1,24,19,820 100.00

14. Dematerialisation of Shares

The trading in Equity Shares of Swaraj Engines Limited is permitted only in dematerialised form. The Company hasjoined National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) to facilitatethe trading. As on 31st March, 2017, 98.7% of the equity capital is held in electronic form.

International Securities Identification Number (ISIN): INE277A01016 (with NSDL and CDSL)

15. Outstanding GDR's / ADR's / Warrants / Convertible Instruments

Not Applicable.

16. Plant Location

Swaraj Engines LimitedPlot No. 2, Industrial Phase IX,S.A.S. Nagar (Mohali), Punjab - 160 062

17. Address for correspondenceRegistrar and Share Transfer AgentM/s MCS Share Transfer Agent LimitedUnit: Swaraj Engines Ltd.F-65, 1st Floor, Okhla Industrial Area, Phase - INew Delhi - 110 020 Phone : 011 - 41406149Email: [email protected] Fax : 011 - 41709881



42

Compliance Officer & Company SecretaryShri M.S. Grewal, Company SecretaryRegistered Office:Swaraj Engines Ltd.Phase-IV, Industrial Area Phone : 0172- 2271620-27S.A.S. Nagar (Mohali), Punjab - 160 055. Fax : 0172- 2272731Email: [email protected]

18. Website Address : www.swarajenterprise.com

VIII Other Disclosures

A. Disclosure of transactions with Related Parties

During FY 2016-17, all transactions entered into with related parties were in the ordinary course of business and on arm’slength basis. The Company has not entered into any transaction of material nature with the promoters, the directors orthe management or their relatives etc. that may have potential conflict with the interests of the Company. The Companyhas no subsidiary. Details of related parties and transactions with them are covered at Note 2.29 of the Annual Accounts.The policy for related party transactions approved by the Board of Directors of the Company is available at Company'swebsite www.swarajenterprise.com

B. Details of non-compliance etc.

There has neither been any non-compliance of any legal provision of applicable law, nor any penalty, stricture imposedby the Stock Exchanges or SEBI or any other statutory authorities, on any matters related to capital market during thelast three years.

C. Whistle Blower Policy

The Company is committed to conduct its business in accordance with applicable laws, rules and regulations and thehighest standards of business ethics, honesty, integrity and ethical conduct. Towards this end, the Company hasadopted a Code of Ethics & Conduct for its employees including Members of the Board of Directors referred to as "theCode" and other Policies as may be applicable from time to time which lays down the principles and standards thatshould govern the actions of the Company and its Employees. Any actual or potential violation of the Code/Policies,howsoever insignificant or perceived as such, would be a matter of serious concern for the Company. The role of theEmployees in pointing out such violations of the Code/Policies cannot be undermined. Accordingly, the Whistle BlowerPolicy ("the Policy") has been formulated with a view to provide a mechanism for employees of the Company toapproach the Chairman of the Audit Committee of the Company or Chairman of the Company.

All Employees of the Company are eligible to make Protected Disclosures under the Policy. Protected Disclosures maybe in relation to matters concerning the Company. Protected Disclosures should be reported in writing and addressed tothe Chairman of the Audit Committee of the Company or Chairman of the Company for investigation. During the yearunder review, no employee has approached the Audit Committee. The details of Whistle Blower Policy are available atthe Company's website www.swarajenterprise.com

D. Disclosure of Accounting Treatment in preparation of Financial Statements

In preparation of the financial statements, the Company has followed the Accounting Standards laid down by theCompanies (Accounting Standards) Rules, 2006. The significant accounting policies which are consistently applied areset out under Note 1 of the Annual Accounts.

E. CEO / CFO Certification

As required under Regulation 17(8) of the Listing Regulations, Chief Executive Officer and Chief Financial Officer of theCompany have certified to the Board regarding the Financial Statements for the year ended 31st March, 2017.






43

F. Management Discussion and Analysis Report

Management Discussion and Analysis Report has been attached to the Directors' Report and forms part of this AnnualReport.

G. Risk Management

Business risk evaluation and management is an ongoing process within the Company. For each function, the impact andprobability of various risks are made and necessary control measures are identified to mitigate these risks, therebyreducing the impact and probability of the risk. During the year, a detailed exercise on "Risk Assessment" related toCompany's main functional areas was carried out.

The Board is apprised of the risk assessment and mitigation process followed by the Company.

H. Code for prevention of Insider Trading Practices

In compliance with SEBI's Regulations on prevention of insider trading, the Company has laid down a comprehensiveCode of Conduct for prevention of insider trading for its designated employees. The Code lays down guidelines, whichadvises them on procedures to be followed and disclosures to be made, while dealing with shares of the Company, andcautioning them of the consequences of violations.

IX Compliance with Mandatory requirements

The Company has complied with the mandatory requirements of the Code of Corporate Governance as stipulated underthe Listing Regulations.

X Adoption of the non-mandatory requirements

a) Audit Qualifications

During the financial year under review, there is no audit qualification in the Company's financial statements. TheCompany continues to adopt best practices to ensure regime of unqualified financial statements.

b) Separate Posts of Chairman and CEO

The Company has separate persons to the post of Chairman and Whole Time Director & CEO.

c) Internal Auditor

The internal auditor reports directly to the Audit Committee.

The Company has not adopted the other non-mandatory requirements as specified in Part E of Schedule II of the ListingRegulations during the year.

XI Code of Conduct

The Company's Board has laid down a well-defined Code of Ethics & Conduct ("the Code") to be followed by BoardMembers and employees of the Company for ethical professional conduct. The Code is available on the website of theCompany (www.swarajenterprise.com). All Board Members and Senior Management Personnel have affirmed compliancewith this Code. A declaration signed by the Whole Time Director & CEO to this effect is enclosed at the end of thisReport.

Mumbai, 25th April, 2017



44

DECLARATION BY THE WHOLE TIME DIRECTOR & CHIEF EXECUTIVE OFFICER UNDER SCHEDULE V OF SEBI(LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015

To

The Members of Swaraj Engines Limited

I, Subhash Mago, Whole Time Director & Chief Executive Officer of Swaraj Engines Limited declare that all the Members of theBoard of Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended31st March, 2017.

Subhash MagoMumbai, 25th April, 2017 Whole Time Director &

Chief Executive Officer

Auditor’s Certificate on Compliance with the Conditions of Corporate Governance

To

The Members of Swaraj Engines Limited

We have examined the compliance of conditions of Corporate Governance by Swaraj Engines Limited ("the Company") for theyear ended 31st March, 2017, as stipulated in Regulations 17 to 27 and Clauses (b) to (i) of Regulation 46(2) and Para C, D andE of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations").

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limitedto procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes (Revised2016) issued by the Institute of Chartered Accountants of India ("ICAI"). The Guidance Note requires that we comply with theethical requirements of the Code of Ethics issued by ICAI. We have complied with the relevant applicable requirements of theStandard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information,and Other Assurance and Related Services Engagements.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company hascomplied with the conditions of the Corporate Governance as specified in Regulations 17 to 27 and Clauses (b) to (i) ofRegulation 46(2) and Para C, D and E of Schedule V of the Listing Regulations, as applicable.

We further state that such compliance is neither an assurance as to the future viability of the Company nor as to the efficiencyor effectiveness with which the Management has conducted the affairs of the Company.

For DAVINDER S. JAAJ & CO.Chartered Accountants(FRN – 000969N)

SUMEET SINGH DHIRPartner

Mumbai, 25th April, 2017 Membership No. 94370


45

ANNEXURE A TO DIRECTORS' REPORTFORM NO. AOC-2

[Pursuant to Clause (h) of Sub-section (3) of Section 134 of the Companies Act, 2013and Rule 8(2) of the Companies (Accounts) Rules, 2014]

Form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to inSub-section (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third provisothereto:

1. Details of contracts or arrangements or transactions not at arm's length basis: NIL

a) Name(s) of the related party and nature of relationship Not applicable

b) Nature of contracts/arrangements/transactions Not applicable

c) Duration of the contracts/ arrangements/transactions Not applicable

d) Salient terms of the contracts or arrangements or transactions Not applicableincluding the value, if any

e) Justification for entering into such contracts or arrangements or Not applicabletransactions

f) Date(s) of approval by the Board Not applicable

g) Amount paid as advances, if any Not applicable

h) Date on which the special resolution was passed in general meeting as Not applicablerequired under first proviso to Section 188

2. Details of material contracts or arrangements or transactions at arm's length basis:

a) Name(s) of the related party and nature of relationship Mahindra & Mahindra Limited,Associate Company

b) Nature of contracts/arrangements/transactions Sale, purchase, service or supplyof goods or materials, availing orrendering of services, leasing ofproperty of any kind, selling orotherwise disposing of or buyingproperty of any kind or any othertransaction in the ordinary courseof business and at arm's length.

c) Duration of contracts/arrangements/transactions FY 2016-17

d) Salient terms of the contracts or arrangements or transactions Total value of transactions duringincluding the value, if any FY 2016-17 was Rs. 809.67 crores

(excluding dividend paid – Rs.13.62crores).

e) Date(s) of approval by the Board, if any Not applicable

f) Amount paid as advances, if any NIL




46

ANNEXURE B TO DIRECTORS' REPORT

DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL)RULES, 2014

Sr. Requirements DisclosureNo.

1 The ratio of the remuneration of each director to 14.76 Timesthe median remuneration of the employees for thefinancial year.

2 The percentage increase in remuneration of each WTD - NilDirector, CEO, CFO & CS. CEO - NA*

CFO - 11.8%CS - 10.0%

3 The percentage increase in the median remuneration The median remuneration of the employees in the financialof employees in the financial year. year was increased by 9.88%. The calculation of % increase

in median remuneration is done based on comparableemployees.

4 The number of permanent employees on the rolls of There were 389 permanent employees as on 31st March,the company. 2017.

5 Average percentage increase already made in the The average percentage change in Managerial employees issalaries of employees other than the managerial 8.59% whereas the average percentage change inpersonnel in the last financial year and its comparison Non-Managerial employees is 10.96% in 2016-17.with the percentile increase in the managerialremuneration and justification thereof and point outif there are any exceptional circumstances forincrease in the managerial remuneration.

6 Affirmation that the remuneration is as per the Yes, it is affirmed.remuneration policy of the company

* The remuneration of CEO started from 1st October, 2016.


47

ANNEXURE C TO DIRECTORS' REPORTForm No. MR-3

SECRETARIAL AUDIT REPORTFOR THE FINANCIAL YEAR ENDED MARCH 31, 2017

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014]

ToThe Members,Swaraj Engines Limited,Phase IV, SAS Nagar,Punjab

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to goodcorporate practices by SWARAJ ENGINES LIMITED (hereinafter called "the Company"). Secretarial Audit was conducted ina manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressingmy opinion thereon.

Based on my verification of Swaraj Engines Limited's books, papers, minute books, forms and returns filed and other recordsmaintained by the company and also the information provided by the Company, its officers, agents and authorized representativesduring the conduct of secretarial audit, I hereby report that in my opinion, the company has, during the audit period coveringthe financial year ended on March 31, 2017 complied with the statutory provisions listed hereunder and also that the Companyhas proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reportingmade hereinafter:

I have examined the books, papers, minute books, forms and returns filed and other records maintained by SWARAJ ENGINESLIMITED ("the Company") for the financial year ended on March 31, 2017 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign DirectInvestment, Overseas Direct Investment and External Commercial Borrowings;

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 ('SEBIAct'):

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011and The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) (Amendment)Regulations, 2013.

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

c) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014, in reference ofthe Employee Stock Option Scheme.

d) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009-Not applicable as the company has not issued any securities during the financial year under review.

e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008 and ChapterV of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015-Not applicable as the company has not issued any debt securities during the financial year under review.


48

f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993regarding the Companies Act and dealing with client- Not applicable as the company is not registered as Registrarto an Issue and Share Transfer Agent during the financial year under review.

g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 including the amendmentsthereof- Not applicable as the company has not delisted any securities from any stock exchange during thefinancial year under review.

h) The Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998- Not applicable as thecompany has not bought back any of its securities during the financial year under review.

(vi) The major provisions and requirements have also been complied with as prescribed under all applicable Labour laws viz.The Factories Act, 1948, The Payment of Wages Act, 1936, The Minimum Wages Act, 1948, The Payment of BonusAct, 1965, The Employees Compensation Act, 1923 etc.

(vii) Environment Protection Act, 1986 and other environmental laws.

(viii) Hazardous Waste (Management and Handling) Rules, 1989 and the Amendments Rules, 2003.

(ix) The Air (Prevention and Control of Pollution) Act, 1981

(x) The Water (Prevention and Control of Pollution) Act, 1974

I have also examined compliance with the applicable clauses of the following:

a) Secretarial Standards issued by The Institute of Company Secretaries of India.

b) The SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 being listed on the National Stock Exchangeof India Limited and BSE Limited;

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines,Standards, etc. mentioned above.

Based on our examination and the information received and records maintained, I further report that

1. The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-ExecutiveDirectors and Independent Directors. There was no change in the composition of the Board of Directors during the year.

2. Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda weresent well in advance, and a system exists for seeking and obtaining further information and clarifications on the agendaitems before the meeting and for meaningful participation at the meeting.

3. All decisions are carried through majority, while the dissenting members' views, if any, are captured and recorded as partof the minutes.

4. The company has proper board processes.

Based on the compliance mechanism established by the company and on the basis of the compliance certificate(s) issued bythe Company Secretary/ Officers and taken on record by the board of directors in their meeting(s), I am of an opinion that:

1. There are adequate systems and processes in the company commensurate with the size and operations of the companyto monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

2. Based on the examination of the relevant documents and records on test check basis the company has complied withthe following laws specifically applicable to the company:

a) The Static and Mobile Pressure Vessels Rules, 1981

b) The Gas Cylinder Rules, 1981, Amended 2004

c) The Batteries (M&H) Rules, 2001


49

I further report that during the audit period the company in its annual general meeting held on 26th July, 2016, passed specialresolutions for:

– Approval and adoption of new Articles of Association of the Company.

– Approval of payment of commission to the Non-Executive Directors of the Company.

I further report that, there were no instances of

(i) Public / Rights / Preferential issue of shares / debentures / sweat equity.

(ii) Redemption / buy-back of securities.

(iii) Major decisions taken by the Members in pursuance to Section 180 of the Companies Act, 2013.

(iv) Merger / amalgamation / reconstruction etc.

(v) Foreign technical collaborations.

For A. ARORA & COMPANYAJAY K. ARORA

(Proprietor)

Place : Chandigarh FCS No. 2191Date : 22.04.2017 C P No.: 993


50

ANNEXURE D TO DIRECTORS’ REPORT

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outl ine of the Company's CSR Policy, including overview of projects or programmes proposed to beundertaken and a reference to the web-link to the CSR policy and projects or programmes.

The brief outline of Company's CSR Policy is given below:

a) CSR Philosophy

The Company recognises that basic purpose of the business is not only to deliver Commercial Objectives but alsoto act as a "Socially Responsible Corporate Citizen". Therefore, the Company is committed to improve the qualityof life for the Community and Society at large.

The Company strongly believes that Economic, Environmental & Social Performance hang together and blendingpassion for Corporate performance with compassion for Communities is central to the Company's corporate philosophyand to pursue this, the Company endeavours to make CSR (Corporate Social Responsibility) a key BusinessProcess for sustainable development.

b) Objective of the CSR Policy

The objective of this policy is to -

• Promote a unified and strategic approach to CSR across the Company by incorporating under one 'Rise forGood' umbrella the diverse range of its philanthropic giving, identifying select constituencies and causes towork with, thereby ensuring a high social impact.

• Ensure an increased commitment at all levels in the organisation, by encouraging employees to participate inthe Company's CSR and give back to society in an organised manner through the employee volunteeringprogramme called ESOPs.

c) CSR Thrust Areas

The Company will focus its efforts within the constituencies of girls, youth & rural people through programsdesigned in the domains of education, health and environment. The Company may also make contributions to itsAssociate Companies' Corporate Foundations/Trusts towards its corpus for projects approved by the Board.

The Company's commitment to CSR will be manifested by investing resources within the broad framework ofSchedule VII of the Companies Act, 2013.

The CSR Policy is available at Company's following Web-link :http://www.swarajenterprise.com/policies

2. Composition of the CSR Committee:

During FY 2016-17, the CSR Committee comprised the following Directors:

1. Shri Sudhir Mankad, Chairman (Independent Director)

2. Shri Vijay Varma (Non-Independent Director)

3. Shri Rajan Wadhera (Non-Independent Director)

4. Shri M.N. Kaushal (Whole Time Director)

In the Meeting of Board of Directors of the Company held on 25th April, 2017, the CSR Committee was reconstituted andpresently comprises of the following Directors:

1. Shri Sudhir Mankad, Chairman (Independent Director)

2. Shri Vijay Varma (Non-Independent Director)

3. Shri Rajesh Jejurikar (Non-Independent Director)

4. Shri Subhash Mago (Whole Time Director & Chief Executive Officer)

http://www.swarajenterprise.com/policies


51

3. Average net profit of the Company for last three financial years : Rs. 8394.80 Lacs

4. Prescribed CSR Expenditure (two per cent of the amount mentioned in item 3 above) : Rs.167.90 Lacs

5. Details of the CSR spent for the financial year:

a. Total amount to be spent for the financial year: Rs. 167.90 Lacs

b. Amount unspent/unpaid : Rs. 5.22 Lacs

c. Manner in which the amount spent during the financial year is detailed below:

Sr. Projects / Activities Sector Locations Amount Outlay Amount spent Cumulative Amount spent:No. (Budget) Project on the project Expenditure Direct or through

or Program or programs upto reporting implementingwise period Agency

State(s) Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs1. Girl Education Promoting Andhra Pradesh, 20.0 20.0 20.0 Through

(Project Nanhi Education Chhattisgarh, ImplementingKali) Delhi, Haryana, Agency –

Madhya Pradesh, K.C. MahindraMaharashtra, Education TrustKarnataka, and Naandi

Tamil Nadu and FoundationRajasthan

2. Contribution to Prime Minister Pan India 50.0 50.0 50.0 Prime MinisterPrime Minister National Relief National ReliefNational Relief Fund Fund Fund

3. Contribution towards Healthcare Chandigarh 34.20 34.20 34.20 DirectLife Savingequipments forPediatric IntensiveCare Unit (PICU) ofPost GraduateInstitute of MedicalEducation andResearch (PGIMER)

4. Hearse Vans to Sewa Healthcare Chandigarh 22.30 22.30 22.30 DirectBharti, NGO forPGIMER

5. Up-gradation of Promoting Punjab 12.40 6.20 6.20 DirectSchool Infrastructure Education

6. Contribution towards Promoting Chandigarh 7.20 7.20 7.20 DirectProviding Education,Infrastructure to Healthcare etc.Society for theRehabilitation ofMentally Challenged(SOREM) for thewelfare of physicallyand mentallychallenged children


52

7. Misc. Activities/ Awareness Punjab/ 21.80 22.78 22.78 DirectInitiatives Campaigns Chandigarh

towardsEnvironment

Sustainability/Safety, Blood

Donation Campsand other social

Activities foroverall goodnessfor the society

at largeTotal 167.90 162.68 162.68

The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives andPolicy of the Company.

Subhash Mago Sudhir MankadWhole Time Director & Chief Executive Officer Chairman

25th April, 2017

Sr. Projects / Activities Sector Locations Amount Outlay Amount spent Cumulative Amount spent:No. (Budget) Project on the project Expenditure Direct or through

or Programs or programs upto reporting implementingwise period Agency

State(s) Rs. Lacs Rs. Lacs Rs. Lacs Rs. Lacs


53

ANNEXURE E TO DIRECTORS' REPORT

Particulars as per the Companies (Accounts) Rules, 2014 and forming part of the Directors' Report for the year ended31st March, 2017

A. CONSERVATION OF ENERGY:

(a) Steps taken for conservation of energy:

Although the activities of the Company are not energy-intensive, necessary measures are taken to contain andbring about savings in energy consumption through improved operational methods and implementation of EnergyManagement Systems.

The following initiatives towards energy conservation were taken during the year:

• Installation of variable frequency drives.

• Alternate use of transformers in Sub-station for reduction in energy consumption.

• Introduction of LED lamps as a replacement of fluorescent lamps in administration block.

• Introduction of timers on machines.

• Utilization of ETP & STP treated water for gardening/horticulture purposes

(b) Steps taken by the company for utilising alternate sources of energy: The Company is exploring potential of usingalternate source of energy which may be considered for implementation in future.

(c) Capital investment on energy conservation equipments: Rs. 9.0 lacs on various energy conservation projects.

Above initiatives besides being energy efficient are also environment friendly.

Overall annualized savings for the year - Rs. 23.0 lacs.

B. TECHNOLOGY ABSORPTION:

(a) The efforts made towards technology absorption:

– Successful development and commercialization of 42 HP engine

– Two Cylinder Genset Engine is under testing

During the year under review, the company's focus continued on technology upgradation and development of newengines in middle and higher HP range. Besides this, the Company is also constantly working on value engineeringwith focused efforts towards reducing the cost of ownership for customers.

(b) Benefits derived as a result of the above efforts: Expansion of product range.

(c) While no technology has been imported during the last 4 years, the Company has gone for high technologyimported machines which helped to enhance the overall productivity and reduction in rework / rejection.

(d) Expenditure on R&D: The Company spent revenue expenditure of Rs. 2.60 crores on Research & Developmentwork during the year, which was 0.3% of the total turnover.


54

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

During the year, there were no exports. Foreign Exchange Outgo is contained in Note No. 2.38 of Notes on Accounts inthe Annual Report.




56

Category of Shareholders No. of Shares held at the No. of shares held at the end %beginning of the year of the year Change(as on 01-04-2016) (as on 31-03-2017) during

Demat Physical Total % of Total Demat Physical Total % of Total the yearShares Shares

A. Promoters

(1) Indian

a) Individuals/ HUF – – – – – – – – –

b) Central Govt. – – – – – – – – –

c) State Govt.(s) – – – – – – – – –

d) Bodies Corporate 6286417 – 6286417 50.62 6286417 – 6286417 50.62 –

e) Banks / FI – – – – – – – – –

f) Any Other.... – – – – – – – – –

Sub-Total (A)(1): 6286417 – 6286417 50.62 6286417 – 6286417 50.62 –

(2) Foreign

a) NRIs-Individuals – – – – – – – – –

b) Other-Individuals – – – – – – – – –

c) Bodies Corporate – – – – – – – – –

d) Banks / FI – – – – – – – – –

e) Any Other... – – – – – – – – –

Sub-Total (A)(2): – – – – – – – – –

Total Shareholding of 6286417 – 6286417 50.62 6286417 – 6286417 50.62 –Promoters (A)=(A)(1)+(A)(2)

B. Public Shareholding

(1) Institutions

a) Mutual Fund 1173370 – 1173370 9.45 1491670 – 1491670 12.01 2.56

b) Banks / FI 11565 300 11865 0.10 1054 – 1054 0.01 –0.09

c) Central Govt. – – – – – – – – –

d) State Govt.(s) – – – – – – – – –

e) Venture Capital Funds – – – – – – – – –

f) Insurance Companies 21101 – 21101 0.17 24588 – 24588 0.20 0.03

g) FIIs 618595 – 618595 4.98 624662 – 624662 5.03 0.05

h) Foreign Venture Capital Funds – – – – – – – – –

i) Others (specify) – – – – – – – – –

Sub-Total (B)(1): 1824631 300 1824931 14.69 2141974 – 2141974 17.24 2.55

IV. Share Holding Pattern (Equity Share Capital Breakup as percentage of Total Equity)

(i) Category-wise Share Holding


57

Category of Shareholders No. of Shares held at the No. of shares held at the end %beginning of the year of the year Change(as on 01-04-2016) (as on 31-03-2017) during

Demat Physical Total % of Total Demat Physical Total % of Total the yearShares Shares

(2) Non-Institutions

a) Bodies Corporate

i) Indian 701340 603 701943 5.65 519249 1803 521052 4.20 –1.45

ii) Overseas – – – – – – – – –

b) Individuals

i) Individual Shareholders 2230262 141610 2371872 19.10 2168263 130800 2299063 18.51 –0.59holding nominal sharecapital upto Rs.1 lakh

ii) Individual Shareholders 939975 33000 972975 7.83 878390 33000 911390 7.34 –0.49holding nominal sharecapital in excess ofRs.1 lakh

c) Others (specify)

i) Trusts & Foundations 57905 – 57905 0.47 53450 – 53450 0.43 –0.04

ii) NRIs/OCBs 203777 – 203777 1.64 206474 – 206474 1.66 0.02

Sub-Total (B)(2): 4133259 175213 4308472 34.69 3825826 165603 3991429 32.14 –2.55

Total Public Shareholding 5957890 175513 6133403 49.38 5967800 165603 6133403 49.38 –(B)=(B)(1)+(B)(2)

C. Shares held by Custodian – – – – – – – – –for GDRs & ADRs

Grand Total (A+B+C) 12244307 175513 12419820 100.00 12254217 165603 12419820 100.00 –

(ii) Shareholding of Promoters

Shareholder’s Name Shareholding at the beginning Shareholding at the end of the year % changeof the year (as on 01-04-2016) (as on 31-03-2017) in share-

No. of % of total % of No. of % of total % of Shares holding

Shares shares of Shares Shares shares of Pledged/during the

the Pledged/ the encumberedyear

Company encumbered Company to totalto total shares

shares

Mahindra & Mahindra Ltd. 4126417 33.22 – 4126417 33.22 – –

Kirloskar Industries Ltd. 2160000 17.39 – 2160000 17.39 – –

Total 6286417 50.62 – 6286417 50.62 – –


58

(iii) Change in Promoters Shareholding

Shareholding at the beginning of the year Cumulative Shareholding during the year(as on 01-04-2016) (01-04-2016 to 31-03-2017)

No. of shares % of total shares No. of shares % of total sharesof the Company of the Company

At the beginning of the year 6286417 50.62 6286417 50.62

Datewise Increase/Decrease in Nil Nil Nil NilPromoters Shareholding during theyear specifying the reasons for increase/decrease (e.g. allotment/transfer/bonus/sweat equity etc.)

At the end of the year 6286417 50.62 6286417 50.62

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs)

Name of Shareholder Shareholding at the Change in Shareholding Cumulativebeginning of the year (No. of Shares) Shareholding during(as on 01-04-2016) the year (01-04-2016

to 31-03-2017)

No. of % of total Increase/ Date/ No. of % of totalShares shares (Decrease) Reason* Shares shares

of the of theCompany Company

1. DSP Blackrock Micro Cap Fund 323300 2.60 219 08-04-2016 391715 3.1524299 29-04-2016

590 13-05-201628610 20-05-2016

6017 27-05-20164560 03-06-2016

934 10-06-20163175 17-06-2016

11 30-06-2016

2. Pinebridge Investments Asia Limited 340648 2.74 – – 340648 2.74A/C Pinebridge InvestmentsGF Mauritius Ltd.

3. Reeta Keyur Parikh 176500 1.42 – – 176500 1.42

4. National Westminster Bank Plc-As 176099 1.42 – – 176099 1.42Trustee of The Jupiter India Fund

5. Vikram Chinubhai Shah & 176000 1.42 – – 176000 1.42Rashmi Vikram Shah

6. SBI Magnum Midcap Fund 159423 1.28 – – 159423 1.28

7. Franklin India Smaller Companies 203551 1.64 (20000) 22-04-2016 153551 1.24Fund (20000) 20-05-2016

(5626) 21-10-2016(4374) 28-10-2016


59

Name of Shareholder Shareholding at the Change in Shareholding Cumulativebeginning of the year (No. of Shares) Shareholding during(as on 01-04-2016) the year (01-04-2016

to 31-03-2017)

No. of % of total Increase/ Date/ No. of % of totalShares shares (Decrease) Reason* Shares shares


8. HDFC Small Cap Fund 150000 1.21 – – 150000 1.21

9. Tata Investment Corporation Limited 130000 1.05 – – 130000 1.05

10. L and T Mutual Fund Trustee 71259 0.57 46600 05-08-2016 126730 1.02Ltd-L and T India Spec 4882 26-08-2016

1989 02-09-20162000 24-02-2017

* Reason for Change in Shareholding is Transfer.Note: Top ten shareholders of the Company as on 31st March, 2017 have been considered for the above disclosure.

(v) Shareholding of Directors and Key Managerial Personnel

Name of Director and KMP Shareholding at the Change in Shareholding Cumulativebeginning of the year (No. of Shares) Shareholding during(as on 01-04-2016) the year (01-04-2016

to 31-03-2017)

No. of % of total Increase/ Date/ No. of % of totalShares shares (Decrease) Reason Shares shares


Direc tors

1. Sh. M.N. Kaushal, Whole Time 1307 0.01 – – 1307 0.01Director

KMPs

1. Sh. Rajinder Arora, CFO 750 0.006 300 05-08-2016/ 1050 0.008Market

Purchase


60

Particulars of Name of Directors TotalRemuneration Sh. Sudhir Dr. T.N. Sh. Dileep Smt. Neera Amount

Mankad Kapoor C. Choksi Saggi

- Fee for attending Board/ 2.60 3.70 2.40 3.20 11.90

Committee Meetings

- Commission 5.00 5.00 5.00 5.00 20.00

- Others – – – – –

Total (B)(1) 7.60 8.70 7.40 8.20 31.90

B. Remuneration to other Directors:

1. Independent Directors (Rs. in Lacs)

V. Indebtedness

The Company has not availed any loan during the year and is debt free Company.

VI. Remuneration of Directors and Key Managerial Personnel

A. Remuneration to Managing Director, Whole-Time Directors and/or Manager:

(Rs. in Lacs)

S. Particulars of Remuneration Sh. M.N. Kaushal Total AmountNo. Whole Time Director

1 Gross Salary

(a) Salary as per provisions contained in Section 17(1) of the 86.12 86.12Income Tax Act, 1961

(b) Value of perquisites under Section 17(2) Income Tax Act, 1961 0.40 0.40

(c) Profits in lieu of salary under Section 17(3) Income Tax Act, 1961 – –

2 Stock Option* – –

3 Sweat Equity – –

4 Commission

- as % of profit – –

- others – –

5 Others – –

Total (A) 86.52 86.52

*Excludes:- 1603 stock options granted by the Company which will be vested and become due for exercise in the subsequent period.- stock options from Associate Company - Mahindra & Mahindra Limited.


61

2. Other Non-Executive Directors (Rs. in Lacs)

Particulars of Remuneration Name of Directors Total Amount

Sh. R.R. Deshpande Sh. Vijay Varma

- Fee for attending Board/Committee Meetings 2.00 2.30 4.30

- Commission 5.00 5.00 10.00

- Others – – –

Total (B)(2) 7.00 7.30 14.30

Total (B)= (B)(1)+ (B)(2) 46.20

Note: Remuneration paid to the directors is well within the limit prescribed in the Companies Act, 2013.

C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD (Rs. in Lacs)

S. Particulars of Remuneration Sh. Subhash Mago Sh. M.S. Grewal Sh. Rajinder Arora Total AmountNo. CEO (appointed Company Secretary CFO

w.e.f. 01.10.2016)1 Gross Salary

(a) Salary as per provisions contained in 42.13 5.88 10.24 58.25Section 17(1) of the Income Tax Act, 1961

(b) Value of perquisites under Section 17(2) 0.51 0.12 0.29 0.92Income Tax Act, 1961

(c) Profits in lieu of salary under Section 17(3) – – – –Income Tax Act, 1961

2 Stock Option* – – – –3 Sweat Equity – – – –

4 Commission- as % of profit – – – –- others – – – –

5 Others – – – –Total (C) 42.64 6.00 10.53 59.17

*Excludes stock options from Associate Company – Mahindra & Mahindra Limited.

VII. Penalties / Punishment / Compounding of Offences

There were no penalties / punishment / compounding of offences for the year ended 31st March, 2017.


63

As per our report of even date attached The Notes referred to above form an integralpart of these financial statements

For DAVINDER S. JAAJ & CO. FOR AND ON BEHALF OF THE BOARDChartered Accountants (FRN000969N)

SUMEET SINGH DHIR M.S. GREWAL SUDHIR MANKADPartner Company Secretary ChairmanMembership No. 094370

RAJINDER ARORA SUBHASH MAGOChief Financial Officer Whole Time Director &


Mumbai, 25th April, 2017 Mumbai, 25th April, 2017

STATEMENT OF PROFIT & LOSS FOR THE YEAR ENDED 31ST MARCH, 2017 (Rs. in Lacs)

Particulars Note 2017 2016

Revenue from Operations (Gross) 2.18 74917.86 59199.80Other Income 2.19 1717.70 1629.50

Total Income 76635.56 60829.30

EXPENSESCost of Raw Materials Consumed 2.20 49291.87 39600.09Changes in Inventories of Finished Goodsand Work-in-Progress 2.21 261.80 (27.50)Excise duty on Sales 8303.43 6609.01Employee Benefits Expense 2.22 3097.67 2675.26Finance Costs 2.23 12.16 4.54Depreciation and Amortisation Expense 2.1, 2.2 & 2.3 1628.07 1379.84Other Expenses 2.24 3494.44 2966.56

Total Expenses 66089.44 53207.80

Profit Before Exceptional Items and Tax 10546.12 7621.50Exceptional Items – –

Profit Before Tax 10546.12 7621.50

Tax Expense(1) Current Tax 2.13 3795.50 2330.51(2) Deferred Tax 2.13 (132.89) 159.76

Total Tax Expense 3662.61 2490.27

Profit After Tax 6883.51 5131.23

Other Comprehensive Income 19.73 (10.81)A (i) Items that will not be reclassified to profit and loss 30.23 (16.53)

(ii) Income tax related to above (10.50) 5.72B (i) Items that may be reclassified to profit and loss – –

(ii) Income tax related to above – –

Total Comprehensive Income for the period 6903.24 5120.42

Earning per Equity Share : 2.25(1) Basic Earning Per Share (Rs.) 55.42 41.31(2) Diluted Earning Per Share (Rs.) 55.38 41.30

Significant Accounting Policies 1Notes on Accounts 2


64

STATEMENT OF CHANGES IN EQUITY (SOCE) FOR THE YEAR ENDED 31ST MARCH, 2017A. CHANGES IN EQUITY SHARE CAPITAL (Rs. in Lacs)

As at

Particulars 31st March, 31st March, 1st April,2017 2016 2015

Outstanding at the beginning 1241.98 1241.98 1241.98

Changes in equity share capital during the year – – –

Outstanding at the end 1241.98 1241.98 1241.98

B. CHANGES IN OTHER EQUITY

For the year ended 31st March, 2017 (Rs. in Lacs)

Particulars Reserves and Surplus

Retained General Capital Other Other TotalEarnings Reserve Reserve Reserve- Compre-

Employee hensiveStock option Income-Outstanding Actuarial

Reserve Gain/(Loss)

As at 1st April, 2016 9106.36 15996.76 0.05 9.42 (10.81) 25101.78

Profit / (Loss) for the Year 6883.51 – – – 19.73 6903.24

Dividend paid on Equity Shares (4098.54) – – – – (4098.54)

Dividend Distribution Tax (834.37) – – – – (834.37)

Options expensed during the period – – – 22.85 – 22.85

As at 31st March, 2017 11056.96 15996.76 0.05 32.27 8.92 27094.96


65

For the year ended 31st March, 2016 (Rs. in Lacs)

Particulars Reserves and Surplus

Retained General Capital Other Other TotalEarnings Reserve Reserve Reserve- Compre-

Employee hensiveStock Option Income-Outstanding Actuarial

Reserve Gain/(Loss)

As at 1st April, 2015 3949.96 15996.76 18.71 – – 19965.43

Transitional Changes due Ind-AS 4958.08 – (18.66) – – 4939.42

Restated Balance as at 1st April, 2015 8908.04 15996.76 0.05 – – 24904.85

Profit / (Loss) for the Year 5131.23 – – – (10.81) 5120.42

Dividend paid on Equity Shares (4098.54) – – – – (4098.54)

Dividend Distribution Tax (834.37) – – – – (834.37)

Options expensed during the period – – – 9.42 – 9.42

As at 31st March, 2016 9106.36 15996.76 0.05 9.42 (10.81) 25101.78

As per our report of even date attached







66

1. COMPANY’S OVERVIEW AND SIGNIFICANT ACCOUNTING POLICIES1.1 Company’s Overview

Swaraj Engines Limited (SEL) is a public limited company incorporated and domiciled in India. SEL has its works /principal place of business at Plot No. 2, Phase-IX, Industrial Area, S.A.S. Nagar (Mohali), Punjab, India and registeredoffice at Phase-IV, Industrial Area, S.A.S. Nagar (Mohali), Punjab, India.

SEL is in the business of manufacturing diesel engines and hi-tech engine components. Diesel Engines are specificallydesigned for tractor application.

The Shares of the Company are listed on both BSE Limited and National Stock Exchange of India Limited.

1.2 Basis of Preparation and Presentation

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historicalcost convention on the accrual basis except for certain financial instruments which are measured at fair values, theprovisions of the Companies Act , 2013 (`Act') (to the extent notified) and guidelines issued by the Securities andExchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of theCompanies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) AmendmentRules, 2016.

The Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101First time adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principlesgenerally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts)Rules, 2014 (IGAAP), which was the previous GAAP.

The financial statements are approved by the Company's Board of Directors and authorised for issue on 25th April 2017.

1.3 Property Plant and Equipment

i) Property, Plant & Equipment are carried at cost of construction or acquisition less depreciation. Costs directlyattributable to acquisition are capitalized until the Property, Plant & Equipment are ready to use.

ii) When an asset is scrapped, or otherwise disposed off, the cost and related depreciation are removed from thebooks of account and resultant profit (including capital profit) or loss, if any, is reflected in Profit and Loss Account.

iii) Depreciation on Tangible Assets (except Land ) is provided on Straight Line Method, pro-rata monthly rests, as perthe life prescribed in Schedule II of the Companies Act, 2013 except for fixed assets mentioned in para (iv) below.

iv) In the following cases, Lower useful life is considered than those prescribed in Schedule II of the Companies Act,2013

Nature of Assets Life adopted in Accounts

a) Patterns, Blocks and Dies 4 Years

b) Vehicles 4 Years

v) The assets' residual value, useful lives and methods of depreciation are reviewed at each financial year end, andadjustment if any, is made prospectively.

1.4 Investment Properties

Investment Properties are properties held to earn rentals and/or for capital appreciation. Investment properties aremeasured at cost and the same is derecognized upon disposal or when it is permanently withdrawn from use with nofuture economic benefits are expected from the disposal.

Depreciation is provided on Straight Line Method, pro-rata monthly rests, as per the life prescribed for Building inSchedule II of the Companies Act, 2013.


67

1.5 Inventories

Inventories are valued at cost (excluding cenvat credit) or net realizable value, whichever is lower. Cost of inventoriesincludes appropriate portion of allocable overheads, wherever applicable, and is ascertained on monthly weighted averagebasis. Finished Goods includes Excise Duty payable.

Excise Duty payable on finished goods is charged to Profit and Loss Account.

1.6 Foreign currency transactions

Foreign currency transactions are recorded at rates of exchange prevailing on the date of transaction. The exchangedifference between the rate prevailing on the date of transaction and on the date of settlement as also on translation ofmonetary items at the end of year is recognized as income or expense, as the case may be.

1.7 Employee Benefits

Company's contributions paid/payable during the year to ESIC and Labour Welfare Fund are recognized in the Statementof Profit and Loss.

Company contributes to the appropriate authorities its share of the Members Provident Fund Account as per the Employees'Provident Fund Act, 1952.

Company contributes to a trust, which has taken Master Policy with the Life Insurance Corporation of India to cover itsliability towards employees' gratuity. Provisions in respect of liabilities of gratuity and leave encashment are madebased on actuarial valuation made by an independent actuary as at the balance sheet date. Gains and Losses throughre-measurements of the net defined benefit liability are recognized in other comprehensive income. The actual return ofthe plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefitobligation is recognized in other comprehensive income.

In respect of Employee Stock Option Scheme:

The compensation cost of stock options granted to employees is measured by the Fair Value Method. The fair value,determined at the grant date of the underlying equity shares, is recognized and amortised on straight line basis over thevesting period.

1.8 Revenue Recognition

Sale of Goods

Revenue from the sale of goods is recognised when the goods are delivered and titles have been passed, at which timeall the following conditions are satisfied:

• The Company has transferred to the buyer the significant risks and rewards of ownership of the goods;

• The Company retains neither continuing managerial involvement to the degree usually associated with ownershipnor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the Company; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Dividend and Interest Income

Dividend income from investments is recognised when the right to receive payment has been established.

Interest income is recognized when it is probable that the economic benefits will flow to the Company and the amount ofincome can be measured reliably. Interest income is accrued on a time basis, by reference to the deposits and at theinterest rate settled with the Bank.


68

1.9 Intangible Assets

Intangible assets are carried at cost and amortized on Straight line method, so as to reflect the pattern in which theassets economic benefits are consumed.

i) Development expenditure:

Development expenditure incurred on technical services and other project/product related expenses are amortizedover the estimated period of benefit, not exceeding five years. Amortization commences as and when the asset isavailable for use.

ii) Software Expenditure:

Software Expenditure incurred is amortized on pro-rata basis over a period not exceeding four years, commencingfrom the year in which the expenditure is incurred.

1.10 Taxes on Income

Current tax is determined as the amount of tax payable in respect of the taxable income for the year.

Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities aregenerally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductibletemporary differences to the extent that it is probable that taxable profits will be available against which those deductibletemporary differences can be utilised.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which theliability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantivelyenacted by the end of the reporting period

1.11 Financial Instruments

Financial assets and financial liabilities are recognized when an entity becomes a party to the contractual provisions ofthe instruments. All financial assets and liabilities are recognized at fair value on initial recognition, except for tradereceivables which are initially measured at transaction price.

1.12 Product Warranty

In respect of warranty on sale of engines, the estimated cost of warranty is accrued at the time of sale. The estimate foraccounting of warranty is periodically reviewed and revisions are made as and when required.

1.13 Impairment of Assets

The carrying value of assets at each balance sheet date are reviewed for Impairment .If any indication exists , therecoverable amount of such assets is estimated and impairment is recognized, if the carrying amount of these assetsexceeds their recoverable amount.

1.14 Accounting policies not specifically referred above are consistent with generally accepted accounting practices.


69

2.1 PROPERTY, PLANT AND EQUIPMENT(Refer Note 1.3)Following are the changes in the carrying value of Property, Plant and Equipment for the year ended 31st March, 2017:

(Rs. in Lacs)

Description of Assets Land Buildings Plant and Office Furniture Electrical Vehicles TotalEquipment Equipments and Installations

Fixtures

Gross Carrying Value as at 50.68 1454.56 17037.96 147.17 92.91 451.18 20.28 19254.741st April, 2016Additions during the year* - 77.17 429.51 6.96 2.00 18.23 58.74 592.61Disposals/Adjustments during the year - - 336.49 1.50 1.57 0.20 - 339.76Gross Carrying Value as at (A) 50.68 1531.73 17130.98 152.63 93.34 469.21 79.02 19507.5931st March, 2017Accumulated depreciation as at - 519.67 8193.03 93.74 73.09 218.76 15.73 9114.021st April, 2016Depreciation expense for the year - 44.78 1521.56 18.90 3.46 27.10 9.03 1624.83Accumulated depreciation on disposals - - 320.15 1.50 1.53 0.20 - 323.38adjustment during the yearAccumulated depreciation as at (B) - 564.45 9394.44 111.14 75.02 245.66 24.76 10415.4731st March, 2017Carrying Value as at (A-B) 50.68 967.28 7736.54 41.49 18.32 223.55 54.26 9092.1231st March, 2017* includes Vehicle in transit - Rs. 13.48 Lacs

Following are the changes in the carrying value of Property, Plant and Equipment for the year ended 31st March, 2016: (Rs. in Lacs)

Description of Assets Land Buildings Plant and Office Furniture Electrical Vehicles TotalEquipment Equipments and Installations

Fixtures

Gross Carrying Value as at 1st April, 2015 50.68 1378.61 14170.57 128.61 88.41 436.52 20.28 16273.68Others - Classified as Investment Property - 33.35 - - - - - 33.35

Restated Gross Carrying Value as at 50.68 1345.26 14170.57 128.61 88.41 436.52 20.28 16240.331st April, 2015Additions during the year - 109.30 3023.01 19.30 4.50 14.66 - 3170.77Disposals/Adjustment during the year - - 155.62 0.74 - - - 156.36Gross Carrying Value as at (A) 50.68 1454.56 17037.96 147.17 92.91 451.18 20.28 19254.7431st March, 2016Accumulated depreciation as at - 489.26 7054.25 77.08 69.68 193.96 12.57 7896.801st April, 2015Others- Classification of Investment Property - 7.59 - - - - - 7.59Restated Accumulated depreciation as at - 481.67 7054.25 77.08 69.68 193.96 12.57 7889.211st April, 2015Depreciation expense for the year - 38.00 1288.25 17.37 3.41 24.80 3.16 1374.99Accumulated depreciation on disposal/ - - 149.47 0.71 - - - 150.18adjustment during the yearAccumulated depreciation as at (B) - 519.67 8193.03 93.74 73.09 218.76 15.73 9114.0231st March, 2016Carrying Value as at (A-B) 50.68 934.89 8844.93 53.43 19.82 232.42 4.55 10140.7231st March, 2016Carrying Value as at 50.68 863.59 7116.32 51.53 18.73 242.56 7.71 8351.121st April, 2015


70

2.2 INVESTMENT PROPERTY(Refer Note 1.4)Following are the changes in the carrying value of Investment Property for the year ended 31st March, 2017:

(Rs. in Lacs)

Description of Assets Investment Property

Gross Carrying Value as at 1st April, 2016 33.35Additions during the year -Disposals during the year -

Gross Carrying Value as at 31st March, 2017 (A) 33.35

Accumulated depreciation as at 1st April, 2016 8.12Depreciation expense for the year 0.53Accumulated depreciation on disposal/adjustment during the year -

Accumulated depreciation as at 31st March, 2017 (B) 8.65

Carrying Value as at 31st March 2017 (A-B) 24.70

Following are the changes in the carrying value of Investment Property for the year ended 31st March, 2016:(Rs. in Lacs)

Description of Assets Investment Property

Gross Carrying Value as at 1st April, 2015 -Transferred from Property, Plant and Equipment 33.35

Restated Gross Carrying Value as at 1st April, 2015 33.35

Additions during the year -Disposals/Adjustment during the year -


Accumulated depreciation as at 1st April, 2015 -Transferred from Property, Plant and Equipment 7.59

Restated Accumulated depreciation as at 1st April, 2015 7.59Depreciation expense for the year 0.53Accumulated depreciation on disposal/adjustment during the year -


Carrying Value as at 31st March, 2016 (A-B) 25.23

Carrying Value as at 1st April, 2015 25.76

Fair value disclosure on Company’s Investment Properties

Part of Company's administrative building/block is letted out and the same is classified as Investment Property based on thenature, characteristics and risks.

As at 31st March, 2017, the fair value of the property is Rs.88.41 Lacs. This valuation is performed by accredited independentvaluer, which is based on replacement cost method and same is categorised at Level 2.


71

2.3 INTANGIBLE ASSETS(Refer Note 1.9)

Following are the changes in the carrying value of Intangible Assets for the year ended 31st March, 2017:

(Rs. in Lacs )

Description of Assets Computer Software

Gross Carrying Value as at 1st April, 2016 69.81

Additions during the year 2.95

Disposals/Adjustment during the year -


Accumulated depreciation as at 1st April, 2016 62.25

Amortisation expense for the year 2.71

Accumulated depreciation on disposal/adjustment during the year -



Following are the changes in the carrying value of Intangible Assets for the year ended 31st March, 2016: (Rs. in Lacs)

Description of Assets Computer Software

Gross Carrying Value as at 1st April, 2015 65.96

Additions during the year 3.85

Disposals/Adjustment during the year -


Accumulated depreciation as at 1st April, 2015 57.93

Amortisation expense for the year 4.32

Accumulated depreciation on disposal/adjustment during the year -



Carrying Value as at 1st April, 2015 8.03


72

2.4 OTHER NON-CURRENT ASSETS (Rs. in Lacs )

Particulars As at

31st March, 2017 31st March, 2016 1st April, 2015

Capital advances - Considered Good

Secured – - 71.78Unsecured 31.12 28.11 145.93

Security Deposits-Considered Good

Unsecured 29.43 29.43 29.43

Other advances -Considered Good

Income Tax (Net of Provisions) 159.82 172.23 147.94Others 164.11 188.09 190.75

Total 384.48 417.86 585.83

2.5 INVENTORIES(Refer Note 1.5) (Rs. in Lacs)

Particulars As at


Raw Materials & Components* 1542.93 1471.42 1845.91

Work-in-Progress 266.54 251.22 333.71

Finished Goods 459.90 737.02 627.03

Stores and Spares # 204.92 156.97 207.95

Loose Tools 133.98 158.23 299.55

Total 2608.27 2774.86 3314.15

* including Goods-in-transit Rs.196.39 Lacs, 2016 - Rs.176.64 Lacs, 2015 - Rs. 177.94 Lacs

# including Goods-in-transit Nil, 2016 - Nil, 2015 - Rs. 1.66 Lacs


73

2.6 CURRENT INVESTMENTS

(Rs. in Lacs)

Particulars Face Value As at per unit 31st March, 2017 31st March, 2016 1st April, 2015(in Rs.) Number Amount Number Amount Number Amount

Unquoted InvestmentsCarried at Fair Value through profit and loss

Investments in Mutual Funds

Mahindra ALP-SBY-Direct-Daily Dividend 1,000 190247 1911.39 - - - -

Kotak Floater Short Term- Growth - (Regular Plan) 1,000 56640 1508.78 - - - -

SBI Magnum Insta Cash Fund-(Regular Plan)- 1,000 13968 500.90 - - - -Growth

Kotak Liquid Scheme Plan A 1,000 - - - - 142166 1738.42- Daily Dividend - (Regular Plan)

ICICI Prudential Money Market Fund - Growth 100 222898 500.00 - - - -- Regular Plan - Daily Dividend Reinvestment

ICICI Prudential Money Market Fund 100 469206 469.96 1038986 1040.33 1030077 1031.40

Birla Sun Life Cash Plus - Daily Dividend 100 - - - - 595988 597.15- Regular Plan - Reinvestment

Birla Sun Life Floating Rate Fund Short Term Plan 100 - - - - 207919 207.96- Daily Dividend - Reinvestment

DWS Insta Cash Plus Fund 100 - - - - 314103 315.06- Daily Dividend - Reinvestment

HDFC Liquid Fund - Dividend - Daily Reinvest 10 - - - - 3077566 313.86

Total 4891.03 1040.33 4203.85

2.7 TRADE RECEIVABLES(Refer Note 2.29) (Rs. in Lacs)

Particulars As at


Unsecured, considered good 1307.23 749.20 686.76

Of the above, Trade Receivables from:

– Related Parties 1207.33 636.91 565.33

– Others 99.90 112.29 121.43


74

2.8 CASH & BANK BALANCES (Rs. in Lacs)

Particulars As at


Cash and Cash Equivalents

Balances with Banks 197.13 69.51 60.45

Cash on hand 1.93 2.09 3.12

Total 199.06 71.60 63.57

Other Bank Balances

Balances with Bank held as Margin Money & Deposit against Guarantees 594.00 2213.00 1600.00

Fixed Deposits with Original maturity greater than 3 months 3936.00 8375.00 9528.00but upto 12 months

Earmarked balances with banks - Unpaid/Unclaimed Dividend 137.61 115.72 99.11

Total 4667.61 10703.72 11227.11

2.9 OTHER FINANCIAL ASSETS (Rs. in Lacs)

Particulars As at


Financial assets at carrying value

Bank Deposit with Original Maturity for more than 12 months 13098.00 6651.00 2695.00

Interest Accrued on Deposits 617.41 710.50 555.91

Advances to Suppliers 17.16 6.73 3.37

Advances to Employees 21.52 29.41 27.28

Total 13754.09 7397.64 3281.56

2.10 OTHER CURRENT ASSETS (Rs. in Lacs)

Particulars As at


Balance with Excise Authorities 24.86 36.12 13.34

Prepaid Expenses 20.99 13.76 14.84

Other Advances recoverable in cash or kind

- CENVAT 88.97 180.47 201.34

- Value Added Tax 27.29 30.17 41.15

- Others 33.55 36.87 33.46

Total 195.66 297.39 304.13


75

2.11 EQUITY SHARE CAPITAL (Rs. in Lacs)

Particulars As at


Authorised:Equity Shares, Rs. 10/- par value 2500.00 2500.00 2500.002,50,00,000 (2016 : 2,50,00,000) Equity Shares

Issued, Subscribed and Paid-Up:Equity Shares, Rs. 10/- par value 1241.98 1241.98 1241.981,24,19,820 (2016 : 1,24,19,820) Equity Shares fully paid-up

1241.98 1241.98 1241.98

The Company has issued only one class of shares referred to as Equity Shares having a par value of Rs. 10/-. Each EquityShareholder is entitled to one vote per share.

The Board of Directors, in their meeting held on 26th April, 2016, proposed a total dividend of Rs.33 per equity share (includingRs. 18 per share as special dividend) and the same was approved by the shareholders at the Annual General Meeting held on26th July, 2016, this has resulted in a cash outflow of Rs. 4932.91 lacs, including corporate dividend tax of Rs. 834.37 lacsduring 2016-17.

Proposed Dividend

The Board of Directors, in their meeting held on 25th April, 2017, proposed a total dividend of Rs. 43 per equity share (includingRs.25 per share as special dividend) for the financial year ended on 31st March, 2017, the proposal is subject to the approvalof shareholders at the Annual General Meeting and if approved, would result in a cash outflow of Rs. 6427.73 lacs includingcorporate dividend tax of Rs.1087.20 lacs.

(i) Equity Shareholders holding more than 5% shares:

Name As at 31st March 2017 As at 31st March 2016 As at 1st April 2015

Number of % of Number of % of Number of % ofShares held Shareholding Shares held Shareholding Shares held Shareholding

Mahindra & Mahindra Limited (M&M) 41,26,417 33.22% 41,26,417 33.22% 41,26,417 33.22%

Kirloskar Industries Limited (KIL) 21,60,000 17.39% 21,60,000 17.39% 21,60,000 17.39%

(ii) Reconciliation of the number of shares outstanding and the amount of share capital :

Description As at 31st March 2017 As at 31st March 2016 As at 1st April 2015

No. of Share Capital No. of Share Capital No. of Share CapitalShares Rs. in lacs Shares Rs. in lacs Shares Rs. in lacs

Number of equity shares at the beginning 1,24,19,820 1241.98 1,24,19,820 1241.98 1,24,19,820 1241.98

Movement in equity during the year – – – – – –

Number of equity shares at the closing 1,24,19,820 1241.98 1,24,19,820 1241.98 1,24,19,820 1241.98

In the last 5 years, the Company has not :– allotted any shares as fully paid up pursuant to contract(s) without payment being received in cash,– allotted any bonus shares,– bought back its shares.


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(iii) Employee Stock Option

Under the Employee Stock Option Scheme - 2015 ( ESOS -2015), 31,000 Equity Shares of the face value of Rs. 10/- areavailable for being granted to eligible employees on the recommendation of the Nomination and Remuneration Committee.Further, during the financial year 2015-16, Company granted 9389 Equity Shares at face value to the eligible employees. As perthe ESOS-2015, Options granted vest in four instalments on the expiry of 18 months, 30 months, 42 months and 54 monthsrespectively. The options may be exercised on any day over a period of 5 years from the date of vesting. Numbers of vestedoptions are exercisable subject to minimum of 50 or number of options vested whichever is lower.

Activity in ESOS-2015 are as follows : No. of shares

Particulars As at


Outstanding at the beginning 9,389 - -

Granted during the year - 9,389 -

Forfeited/Expired 1,350 - -

Exercised during the year - - -

Outstanding at the end 8,039 9,389 -

The fair value on the date of grant is estimated using the Black-Scholes model with the following assumptions :

Grant date 8th December 2015

Share price in market at the time of option grant (Rs.) 911.75

Exercise price (Rs.) 10.00

Expected volatility (%) 28.67

Expected life of the option (years) 5.73

Expected dividends (%) 1.65

Risk-free interest rate (%) 7.69

Weighted average fair value as on grant date (Rs.) 823.18


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2.12 LONG TERM PROVISIONS (Rs. in Lacs)

Particulars As at


Provision for Employee Benefits (Refer Note 1.7)

– Provision for Leave Encashment 257.26 233.03 192.02

Others– Provision for Warranty (Refer Note 2.43) 31.12 19.53 21.79

Total 288.38 252.56 213.81

2.13 CURRENT TAX AND DEFERRED TAX (Refer Note 1.10)

(a) Deferred Tax (Rs. in Lacs)

Particulars As at


Deferred Tax Liabilities

– On Property, Plant & Equipment 785.25 860.85 724.10

Deferred Tax Assets

– On Employee benefits 158.08 100.79 92.57

Deferred Tax Liabilities / (Assets) 627.17 760.06 631.53

(b) Income Tax recognised in Profit and Loss (Rs. in Lacs)

Particulars Year ended Year ended

31st March, 2017 31st March, 2016

Current Tax 3795.50 2330.51Deferred Tax (132.89) 159.76

Total Income Tax expense 3662.61 2490.27

(c) Reconciliation of Income Tax provision to the amount computed by applying the statutory income tax rate to theincome before income taxes is summarised below : (Rs. in Lacs)

Particulars Year ended Year ended

31st March, 2017 31st March, 2016

Profit before tax 10546.12 7621.50Income tax expense calculated at 34.61% (2016: 34.61 % incl. Sur & Cess) 3649.80 2637.65Income not considered for tax purposes (52.62) (78.92)Effect of estimated non-deductible expenses 55.72 65.88Tax incentive - Investment Allowance - (133.41)Others (including temporary difference) 9.71 (0.93)

Income Tax expense recognised in profit and loss 3662.61 2490.27


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2.14 TRADE PAYABLES (Rs. in Lacs)

Particulars As at


Trade payable - Micro, Small and Medium enterprises (Refer Note 2.41) 1441.21 959.87 854.92Trade payable - Other than Micro, Small and Medium enterprises 4658.33 3770.90 3442.25Accruals 913.88 669.86 520.44

Total 7013.42 5400.63 4817.61

2.15 OTHER FINANCIAL LIABILITIES (Rs. in Lacs)

Particulars As at


Current Liabilities at Carrying ValueCapital Purchases 97.46 296.19 158.71Others 35.34 35.41 41.58Deposits & Retention Money 17.99 14.46 18.25Unpaid / Unclaimed Dividend* 137.61 115.72 99.11

Total 288.40 461.78 317.65

* There is no amount due and outstanding to be credited to Investor Education and Protection Fund as on 31st March, 2017.

2.16 SHORT TERM PROVISIONS (Rs. in Lacs)

Particulars As at


Provision for Employee Benefits (Refer Note 1.7)

– Provision for Gratuity (Refer Note 2.28) 19.38 57.35 97.60– Provision for Leave Encashment 72.70 68.98 59.82Others– Provision for Warranty (Refer Note 2.43) 134.47 87.80 80.26

Total 226.55 214.13 237.68

2.17 OTHER CURRENT LIABILITIES (Rs. in Lacs)

Particulars As at


Advances received from customers 1.41 0.28 1.55Statutory dues 433.50 226.10 163.48

Total 434.91 226.38 165.03

2.18 REVENUE FROM OPERATIONS (Refer Note 2.34) (Rs. in Lacs)

Particulars 2017 2016

Revenue from sale of products (including excise duty) 74583.49 58921.39Revenue from rendering of services 3.12 4.85Other operating revenue 331.25 273.56

Total 74917.86 59199.80


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2.19 OTHER INCOME (Rs. in Lacs)


Interest Income 1625.38 1392.89Dividend Income from Investments carried at fair value through profit or loss 120.13 215.73Rental income from Investment property 13.46 11.63Profit/ (Loss) on Sale of Investments carried at fair value through profit or loss (70.30) –Fair Value Gain / (Loss) on Investments carried at fair value through profit or loss 14.52 –Profit / (Loss) on disposal of Property, Plant and Equipment 13.06 8.80Misc Income 1.45 0.45

Total 1717.70 1629.50

2.20 COST OF MATERIALS CONSUMED(Refer Note 2.36) (Rs. in Lacs)


Opening stock 1294.77 1667.96Add: Purchases 49366.46 39275.51

50661.23 40943.47Less:Closing Stock 1346.53 1294.77Other Jobs 22.83 1369.36 48.61 1343.38

Total 49291.87 39600.09

2.21 CHANGES IN INVENTORIES OF FINISHED GOODS AND WORK-IN-PROGRESS (Rs. in Lacs)


Inventories at the end of the year:Finished goods 459.90 737.02Work-in-progress 266.54 251.22

726.44 988.24Inventories at the beginning of the year:Finished goods 737.02 627.03Work-in-progress 251.22 333.71

988.24 960.74

Net (increase) / decrease 261.80 (27.50)

2.22 EMPLOYEE BENEFITS EXPENSE (Refer Note 1.7) (Rs. in Lacs)


Salaries and Wages 2521.47 2226.20Contribution to provident and other funds 193.60 173.22Employee Stock Compensation 41.64 9.42Staff welfare expenses 340.96 266.42

Total 3097.67 2675.26


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2.23 FINANCE COSTS (Rs. in Lacs)


Interest expense & Bank Charges 1.54 3.18Exchange Fluctuation 14.07 0.60Interest Unwinding (Income) / Expense (3.45) 0.76

Total 12.16 4.54

2.24 OTHER EXPENSES (Rs. in Lacs)


Power, Fuel & Water Charges 522.83 434.91Consumption of Stores & Spares 1027.45 890.80Hire & Service Charges 595.21 494.20Rates and Taxes 11.73 5.32Insurance 18.07 18.17Repairs and Maintenance– Buildings 13.29 13.46– Machinery 404.09 272.37– Others 18.21 21.26Postage & Telephone 5.80 5.40Printing & Stationery 15.35 9.89Travelling & Conveyance Expenses 77.52 57.82Auditors' Remuneration– Statutory Auditor's

Audit Fee 2.78 2.75Tax Audit Fee 0.51 0.50Other Services 2.98 1.75Expenses Reimbursed 0.81 0.87

– Cost Auditor’sAudit Fee 0.71 0.70

CSR Expenses (Refer Note 2.39) 168.88 170.00Research & Development Expenses 259.62 212.93Other Marketing Expenses 119.29 96.65Miscellaneous Expenses 229.31 256.81

Total 3494.44 2966.56

2.25 EARNING PER SHARE (Rs. in Lacs)


Profit for the year 6883.51 5131.23Profit for the year for diluted earning per share 6883.51 5131.23Weighted average number of Ordinary Equity Shares used inComputing basic earning per share 12419820 12419820Effect of potential Ordinary Equity Shares on employee stock options 7981 3094Weighted average number of Ordinary Equity Shares used inComputing diluted earning per share 12427801 12422914Basic earning per share (Rs.) (Face Value of Rs. 10 per share) 55.42 41.31Diluted earning per share (Rs.) 55.38 41.30


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2.26 Financial Instruments(Refer Note 1.11)

Capital management

Company's capital management objectives are to:

– ensure the company's ability to continue as a going concern

– provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

For the purposes of the Company's Capital Management, capital includes issued capital and all other equity reserves. Companymanages its capital structure and makes adjustments in the light of changes in economic environment and the requirements ofthe financial covenants.

(Rs. in Lacs)

Particulars 31st 31st 1stMarch, 2017 March, 2016 April, 2015

Equity Share Capital 1241.98 1241.98 1241.98

Other Equity Reserves 27094.96 25101.78 24904.85

Total 28336.94 26343.76 26146.83

Categories of Financial Assets and Financial Liabilities

As at 31st March, 2017 (Rs. in Lacs)

Particulars Amortised Fair Value Fair Value Total Total FairCosts through through OCI Carrying value

Profit or Loss Value

Current Assets

Investments - 4891.03 - 4891.03 4891.03

Trade Receivables 1307.23 - - 1307.23 1307.23

Cash and Cash Equivalents 199.06 - - 199.06 199.06

Other Bank Balances 4667.61 - - 4667.61 4667.61

Other Financial Assets 13754.09 - - 13754.09 13754.09

Total Financial Assets 19927.99 4891.03 - 24819.02 24819.02

Current Liabilities

Trade Payables 7013.42 - - 7013.42 7013.42

Other Financial Liabilities 288.40 - - 288.40 288.40

Total Financial Liabilities 7301.82 - - 7301.82 7301.82


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As at 31st March, 2016 (Rs. in Lacs)

Particulars Amortised Fair Value Fair Value Total Total FairCosts through through OCI Carrying Value


Current Assets

Investments - 1040.33 - 1040.33 1040.33






Current LiabilitiesTrade Payables 5400.63 - - 5400.63 5400.63



As at 1st April, 2015 (Rs. in Lacs)

Particulars Amortised Fair Value Fair Value Total Total FairCosts through through OCI Carrying Value


Current AssetsInvestments - 4203.85 - 4203.85 4203.85






Current Liabilities

Trade Payables 4817.61 - - 4817.61 4817.61



Financial Risk Management FrameworkCompany's activities expose it to financial risks viz credit risk and liquidity risk.

Credit RiskMajority of Company's Receivables pertain to Mahindra & Mahindra Limited, an Associate Company. Based on the overallcredit worthiness of Receivables, coupled with their past track record, Company expects No / Minimum Risk with regard to itsoutstanding receivables.

Also, there is mechanism in place to periodically track the outstanding amount and assess the same with regard to its


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realisation. Company expect all the debtors to be realised in full, accordingly no provision has been made in the books ofaccount.

Credit risk on cash and cash equivalents is limited as Company generally invest in deposits with banks. Further, Investmentsare primarily in debt based liquid mutual funds only and the same are fairly spread across various schemes.

Liquidity Risk

(i) Liquidity Risk Management

The Company manages liquidity risk by maintaining adequate reserves, banking facilities and by continuously monitoringforecast & actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of Financial Liabilities

The following tables detail the Company’s remaining contractual maturity for its non-derivative financial liabilities with agreedrepayment periods. The amount disclosed in the tables have been drawn up based on the earliest date on which the Companycan be required to pay. Financial Liabilities include Trade Payables, Capital Purchases, Unpaid/Unclaimed Dividend etc. whichare in the normal course of business having maturity plan of less than 1 year and non-interest bearing.

(Rs. in Lacs)

Particulars Less than 1 Year 1-3 Years 3 Years to 5 years and5 Years above

31st March, 2017Trade Payables 7013.42 – – –Other Financial Liabilities 288.40 – – –

Total 7301.82 – – –

31st March, 2016Trade Payables 5400.63 – – –Other Financial Liabilities 461.78 – – –

Total 5862.41 – – –

1st April, 2015Trade Payables 4817.61 – – –Other Financial Liabilities 317.65 – – –

Total 5135.26 – – –

As at 31st March, 2017, the Company had a working capital of Rs. 196.60 crores including cash and bank balance & bankdeposits of Rs. 178.27 crores and investment of Rs. 48.91 crores.

As at 31st March 2016, the Company had a working capital of Rs. 167.32 crores including cash and bank balance & bankdeposits of Rs. 173.11 crores and investment of Rs. 10.40 crores.Accordingly, company do not perceive any liquidity risk.

(iii) Financing arrangementsThe Company had access to the following undrawn borrowing facilities at the end of the reporting period: (Rs. in Lacs)

Particulars 31st 31st 1stMarch, 2017 March, 2016 April, 2015

Secured Bank Overdraft facility– Expiring within one year – – –– Expiring beyond one year 500 500 500

Total 500 500 500


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2.27 Fair Value Measurement

The fair values of the Financial Assets and Liabilities are included in the amount at which the instrument could be exchangedin a current transaction between willing parties, other than in a forced or liquidation sale.

The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuationtechnique.

Level 1 - Quoted (unadjusted prices) in active markets for identical assets or liabilities.

Level 2 - Other Techniques for which all inputs which have a significant effect on the recorded fair value are observable, eitherdirectly or indirectly.

Level 3 - Techniques which use inputs that have a significant effect on the recorded fair value that are not based on observablemarket data.

Fair Valuation Techniques and Inputs used - recurring Items(Rs. in Lacs)

Financial Assets/ Financial Liabilities Fair value as at Fair value Valuation Significantmeasured at Fair value hierarchy technique(s) unobservable

31st March, 31st March, 1st April, and key input(s)2017 2016 2015 input(s)

Financial AssetsInvestments in Mutual Fund 4891.03 1040.30 4203.85 Level 2 As on Date –

NAV of theUnquoted

Fund

Total Financial Assets 4891.03 1040.30 4203.85


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VI. Actuarial assumptions

1. Discount rate 7.45% 7.90%

2. Expected Return 8.00% 8.50%

3. In-Service Mortality IAL 2006-08 Ultimate IAL 2006-08 Ultimate

4. Turnover Rate 5.00% 5.00%

5. Salary Rise - Officers 8.00% 8.00%

6. Salary Rise - Workers 5.00% 5.00%

7. Remaining Working Life 19.33 Years 20.79 Years

The sensitivity of the defined benefit obligation to changes in the weighted principal assumptions is: (Rs. in Lacs)

Principal assumption Changes in Increase/(Decrease) impactassumption on defined benefit obligation

Increase in Decrease inassumption assumption

Discount rate 2017 0.50% (22.46) 23.752016 0.50% (20.95) 22.19

Salary growth rate 2017 0.50% 23.96 (22.86)2016 0.50% 22.48 (21.42)

The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to previous period.

(Rs. in Lacs)

Particulars Gratuity - Funded

2017 2016


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2.29 Related Party Transactions

Name of the Related Companies Mahindra & Mahindra Limited (M&M) - Associate Company

Mahindra Agri Solutions Ltd. (MASL) - Subsidiary of M&M

Mahindra HZPC Pvt. Ltd. (MHZPC) - Subsidiary of M&M

Key Management Personnel Shri M.N. Kaushal (Whole Time Director) (Upto 31.03.2017)

Shri Subhash Mago (CEO) (w.e.f. 01.10.2016)

Details of transactions between the Company and its related parties are disclosed below: (Rs. in Lacs)


i) Associates

a. Purchase of raw materials and components 1710.79 1061.01

M&M 1710.79 1061.01

b. Sale of finished goods (net of warranty) 78797.88 62239.66

M&M 78797.88 62239.66

c. Purchases of fixed assets 46.16 8.31

M&M 46.16 8.31

d. Receiving of services 390.66 460.16

M&M 390.66 460.16

e. Rendering of services 23.54 97.63

M&M 21.70 96.55

MHZPC 0.88 1.08

MASL 0.96 –

f. Dividend paid 1361.72 1361.72

M&M 1361.72 1361.72

Aggregate balances outstanding as at the year end

– Receivables 1207.33 636.91

M&M 1207.11 636.91

MASL 0.22 –

– Payables 22.73 0.10

M&M 22.73 0.10

– Other Advance – 16.18

M&M – 16.18

ii) Key Management Personnela) Remuneration* 135.38 75.11

– Shri M.N.Kaushal 90.81 75.11

– Shri Subhash Mago 44.57 –

b) Dividend paid 0.43 0.43

– Shri. M.N.Kaushal 0.43 0.43

*excludes stock option from Associate Company - Mahindra & Mahindra Limited.


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2.30 Contingent Liabilities and Commitments ( To the extent not provided for) (Rs. in Lacs)

Particulars As at


Contingent Liabilities

Claims against the Company not acknowledged as debt

– Excise matters in dispute 87.47 101.59 101.59

– Income Tax matters in dispute* 148.94 148.94 228.39

– Others** 351.57 241.67 241.67

Commitments

Estimated amount of contracts remaining to be executed on capitalaccount and not provided for (net of advances and deposits) 338.91 666.55 2562.71

*Assessment of Income Tax is completed upto Assessment Year 2014-15. There is no demand which is disputed in Appealand not provided for. For earlier Assessment Years, tax authorities have filed appeals/references which involve an estimatedliability of Rs. 148.94 Lacs (31.03.2016 - Rs. 148.94 Lacs)

**Represents demand for enhanced compensation for land allotted to Company in 1988. Company is in appeal with Hon’bleSupreme Court of India. Pending appeal, Rs. 100.00 lacs was deposited with the court during the financial year 2008-09 and thesame forms part of Other Non-Current assets under Note 2.4.

2.31 While letters for confirmation of balance of sundry creditors, sundry debtors and material lying with vendors have beensent, only few responded. Rests are subject to confirmation.

2.32 Segment Reporting

The Company is primarily engaged in the business of diesel engines, diesel engine components and spare parts. As the basicnature of these activities are governed by the same set of risk, returns and internal business reporting system, accordinglythese have been grouped as single segment in above disclosures as per Ind AS-108 dealing with " Operating Segment".

2.33 Particulars in respect of goods manufactured:

Class of Goods Unit of Qty 2017 2016

Production

Engine Nos. 81,989 64,256

Despatches

Engine Nos. 82,297 64,088

2.34 Particulars in respect of Revenue from Operations (Gross): (Rs. in Lacs)

Class of Goods 2017 2016

Sale of Products

Engines 72800.56 57343.57

Engine Components 384.19 186.69

Spares 1398.74 1395.98

Total 74583.49 58926.24

Other operating revenueScrap & Others 334.37 273.56

Total 74917.86 59199.80


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2.35 Particulars in respect of Finished Goods:

Class of Goods Unit of Qty Opening Balance Closing Balance

Qty. Rs. in Lacs Qty. Rs. in Lacs

Engines Nos. 966* 737.02 644* 459.90(813) (627.03) (966*) (737.02)

* Excludes 14 Nos. (2016 : 15 Nos. ) engines consumed for R&D purposes

2.36 Analysis of Raw Materials consumed: (Rs. in Lacs)

Class of Goods 2017 2016

Crank Shaft Assy 4302.21 3448.62

Crank Case Assy 5415.35 4381.76

Flywheel 2173.09 1946.45

Fuel Pump Assy 5735.59 4484.78

Others (including components) 31665.63 25338.48

Total 49291.87 39600.09

Notes : The amounts of all the items in Analysis of Raw Materials consumed represent the issues during the year. The figureof others (including components) is a balancing figure based on total consumption shown in Note No. 2.20 and includesadjustments for excess/ shortage/damages/obsolete found on physical verification.2.37 Value of imported and indigenous Raw Materials, Components, Stores and Spares etc. consumed and percentage

of each in Total Consumption

Particulars 2017 2016%age Rs. in Lacs %age Rs. in Lacs

Raw Material & ComponentsImported 0.02 10.81 0.02 7.99Indigenous 99.98 49281.06 99.98 39592.10

100.00 49291.87 100.00 39600.09

Stores, Consumables, Spares & Loose ToolsImported - - - -Indigenous 100.00 1027.45 100.00 890.80

100.00 1027.45 100.00 890.80

2.38 Value of Imports on CIF Basis: (Rs. in Lacs)


Raw Material & Components 10.66 7.83Stores & Spares* - 4.98Capital Goods 8.20 1027.96

Total 18.86 1040.77

* forming part of R&D Expenditure for previous year ending March 31, 2016


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2.39 CSR Expenditure:(a) Gross Amount required to be spent – Rs. 167.90 lacs.(b) Amount spent during the year on: (Rs. in Lacs)

Particulars In Cash Yet to be paid Totalin Cash

(i) Construction/Acquisition of any asset - - -(ii) On purposes other than (i) above 162.68 6.20 168.88

2.40 Disclosure on Specified Bank Notes (SBNs) :During the year, the Company had specified bank notes or other denomination note as defined in the MCA notification G.S.R.308(E) dated March 31, 2017 on the details of Specified Bank Notes (SBNs) held and transacted during the period fromNovember 9, 2016 to December 30, 2016, the denomination-wise SBNs and other notes as per the notification is given below:

(in Rs.)

Particulars SBNs* Other denomination Totalnotes

Closing cash in hand as on November 8, 2016 148500 13402 161902(+) Permitted receipts - 787624 787624(–) Permitted payments - 556096 556096(–) Amount deposited in Banks 148500 - 148500

Closing cash in hand as on December 30, 2016 - 244930 244930

* for the purposes of this clause, the term 'Specified Bank Notes' shall have the same meaning provided in the notificationof the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407 (E), dated the8th November, 2016.2.41 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006Micro, Small and Medium Enterprises have been identified by the Company on the basis of the information available. Totaloutstanding dues of Micro, Small and Medium enterprises, which are outstanding for more than the stipulated period, are givenbelow :-

Particulars 31st March, 2017 31st March, 2016

(a) Dues remaining unpaid as at 31st March

– Principal – –

– Interest on the above – –

(b) Interest paid in terms of Section 16 of the Act along with the amount ofpayment made to the supplier beyond the appointed date during the year

– Principal paid beyond the appointed date – –

– Interest paid in terms of Section 16 of the Act – –

(c) Amount of interest due and payable for the period of delay in payments – –

made beyond the appointed date during the year

(d) Further interest due and payable even in succeeding year, until such date – –

when the interest due as above are actually paid to the small enterprises

(e ) Amount of interest accrued and remaining unpaid as at 31st March – –


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2.42 First-time adoption of Ind-AS

These financial statements, for the year ended 31st March, 2017, are the Company's first financial statements prepared inaccordance with Ind-AS. For periods up to and including the year ended 31st March, 2016, the Company prepared its financialstatements in accordance with statutory reporting requirement in India immediately before adopting Ind-AS (‘previous GAAP’).

Accordingly, the Company has prepared financial statements which comply with Ind-AS applicable for periods ending on orafter 31st March, 2017, together with the comparative period data as at and for the year ended 31st March, 2016, as describedin the summary of significant accounting policies. In preparing these financial statements, the Company's Opening BalanceSheet was prepared as at 1st April, 2015, the Company's date of transition to Ind-AS. This note explains the principal adjustmentsmade by the Company in restating its Indian GAAP financial statements, including the balance sheet as at 1st April, 2015 andthe financial statements as at and for the year ended 31st March, 2016.

Exemptions applied - Company has not opted for any exemptions as given in Ind-AS 101First Time Ind-AS Adoption reconciliations

The effect of the company’s transition to Ind-AS is summarized in this note as follows:

(i) Reconciliation of Equity and Net Profit as previously reported under Indian GAAP to Ind-AS;

(ii) Adjustments to the statement of cash flows.

(i) (a) Reconciliation of Total Equity as at 31st March, 2016 and 1st April, 2015:(Rs. in Lacs)

Particulars As at 31st March, 2016 As at 1st April, 2015

Equity as reported under previous GAAP 21404.89 21207.41

Ind-AS: Adjustments increase / (decrease):

Dividends not recognised as liability until declared 4932.91 4932.91

Discounting of Provisions 5.96 6.51

Equity as reported under Ind-AS 26343.76 26146.83

(i) (b) Reconciliation of Total Comprehensive Income for the year ended 31st March, 2016:

(Rs. in Lacs)

Particulars Year Ended31st March, 2016

Profit or Loss as per previous GAAP 5120.07

Ind-AS: Adjustments Increase/(Decrease):

Actuarial (Gain) / Loss on employee defined fund recognised in other comprehensive Income (net of tax) 10.81

Discounting Impact of Long Term Provisions (0.55)

Employee Stock Compensation Valued at Fair Value 0.90

Total adjustment to profit or loss 11.16

Profit or Loss under Ind-AS 5131.23

Other comprehensive income (10.81)

Total Comprehensive Income under Ind-AS 5120.42

Note: No statement of comprehensive income was produced under previous GAAP. Therefore, the reconciliation starts withprofit under previous GAAP.


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(ii) Material adjustments to the Statement of Cash Flows

(Rs. in Lacs)

Particulars Year ended 31 March, 2016

Previous Ind AS Ind ASGAAP Adjustments

Net cash flows from operating activities 6303.15 0.76 6303.91

Net cash flows from investing activities (1375.04) - (1375.04)

Net cash flows from financing activities (4920.08) (0.76) (4920.84)

Net increase / (decrease) in cash and cash equivalents 8.03 - 8.03

Cash and cash equivalents at beginning of period 63.57 - 63.57

Cash and cash equivalents at end of period 71.60 - 71.60

Analysis of cash and cash equivalents as at 31st March, 2016 and 1st April, 2015 for the purpose of Statement of Cashflows under Ind-AS

(Rs. in Lacs)

Particulars As at 31st March, 2016 As at 1st April, 2015

Cash and cash equivalents for the purpose of Statement of 71.60 63.57Cash flows as per Previous GAAP

Cash and cash equivalents for the purpose of Statement of 71.60 63.57Cash flows as per Ind-AS

2.43 Provision for warranty relates to sale of engines, the estimated cost of which is accrued at the time of sale.

(Rs. in Lacs)

Particulars 31st March, 2017 31st March, 2016

Balance as at 1st April 107.33 102.05

Add : Provision made during the year 164.70 73.18

Less : Utilisation during the year 102.99 68.66

Less : Unwinding of Discount and effect of changes in the discount rate 3.45 (0.76)

Balance as at 31st March 165.59 107.33

Out of the above :-

Classified as Non-Current 31.12 19.53

Classified as Current 134.47 87.80

165.59 107.33

2.44 Previous year's figures have been regrouped, wherever necessary, so as to correspond with those of the currentyear.


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STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31ST MARCH, 2017 (Rs. in Lacs)

2017 2016

A. CASH FLOW FROM OPERATING ACTIVITIES

Profit before Tax for the year 10546.12 7621.50

Adjustments for :

Depreciation and amortisation 1628.07 1379.84

Employee Stock Compensation 22.85 9.42

Interest (Received) / Paid ( Net ) (1613.22) (1388.35)

Return on Mutual Fund Investments (Net) (49.83) (215.73)

(Profit)/Loss on disposal of Property, Plant and Equipment (13.06) (8.80)

(Gain)/Loss on Investments carried at fair value through Profit and Loss (14.52) –

Actuarial Gain/(Loss) on re-measurement of Defined Benefit Liability 30.23 (16.53)

Operating Profit Before Working Capital Changes 10536.64 7381.35

Movements in Working Capital:

(Increase)/Decrease in Trade and Other Receivables (Non-Current/Current) (344.78) (23.52)

(Increase)/Decrease in Inventories 166.59 539.29

(Decrease)/Increase in Trade and Other Payables (Non-Current/Current) 1674.29 787.09

Cash Generated from Operations 12032.74 8684.21

Income taxes paid (Net of refund) (3793.59) (2380.30)

Cash Flow Before Extraordinary Items 8239.15 6303.91

Extraordinary Items – –

Net Cash Generated from Operating Activities 8239.15 6303.91

B. CASH FLOWS FROM INVESTING ACTIVITIES

Investments Sales / (Purchase) (Net) (3836.18) 3163.52

Bank Deposit (Placed) / Matured (Net) (389.00) (3416.00)

Interest received 1625.38 1392.89

Return on Mutual Fund Investment (Net) 49.83 215.73

Purchase of Property, Plant and Equipment & Intangible^ (646.09) (2729.54)

Increase in Ear Marked Balances (21.89) (16.61)

Proceeds from disposal of Property, Plant and Equipment 29.44 14.97

Net Cash (used in) / Generated from Investing Activities (3188.51) (1375.04)

(^excludes Capital Advances)


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C. CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid to owners of the Company (including DDT) (4911.02) (4916.30)

Interest and Finance Charges paid (12.16) (4.54)

Net Cash used in Financing Activities (4923.18) (4920.84)

Net Increase / (Decrease) in Cash and Cash Equivalents 127.46 8.03

Cash and Cash Equivalents at the beginning of the year 71.60 63.57

Cash and Cash Equivalents at the end of the year 199.06 71.60

Note : Previous year figures have been regrouped wherever found necessary.

As per our report of even date attached







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INDEPENDENT AUDITORS’ REPORTTo the Shareholders of Swaraj Engines Limited

Report on the Ind AS Financial Statements

We have audited the accompanying Ind AS financial statements of Swaraj Engines Limited ("the Company"), which comprisethe Balance Sheet as at 31st March 2017, the Statement of Profit and Loss (Including Other Comprehensive income), the CashFlow Statement and the statement for change in Equity for the year then ended and a summary of the significant accountingpolicies and other explanatory information.

Management's Responsibility for the Financial Statements

The Management and Board of Directors of the Company is responsible for the matters stated in Section 134(5) of theCompanies Act 2013 ("The Act") with respect to the preparation of these Ind AS financial statements that give a true and fairview of the state of affairs (financial position), profit or loss (including other comprehensive income), cash flows and change inEquity of the Company in accordance with the accounting principles generally accepted in India, including the Indian AccountingStandards (Ind AS) prescribed under section 133 of the Act read with relevant rules issued there under.

This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act forsafeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and applicationof appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementationand maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completenessof the accounting records, relevant to the preparation and presentation of the Ind AS financial statements that give a true andfair view and are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Ind AS financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required tobe included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit of Ind AS financial statements in accordance with the Standards on Auditing specified under Section143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the Ind AS financialstatements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of materialmisstatement of the Ind AS financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal financial control relevant to the Company's preparation of the Ind AS financial statements that give a true andfair view in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Management and Board of Directors of the Company, as well as evaluating the overall presentation ofthe Ind AS financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on theInd AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Ind AS financialstatements give the information required by the Act in the manner so required and give a true and fair view in conformity withthe accounting principles generally accepted in India including the Ind AS, of the state of affairs (financial position) of theCompany as at 31st March, 2017, its profit (financial performance including other comprehensive income), its cash flows andthe changes in Equity for the year ended on that date.


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Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditor's Report) Order, 2016 ("the Order") issued by the Central Government in terms ofSection 143(11) of the Act, we give in "Annexure A" a statement on the matters specified in paragraphs 3 and 4 of the Order.

As required by section 143(3) of the Act, we report that:

i. We have sought and obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purposes of our audit;

ii. In our opinion, proper books of account as required by law have been kept by the Company so far as appears from ourexamination of those books;

iii. The Balance Sheet, Statement of Profit and Loss, Cash Flow Statement and statement of changes in Equity dealt with bythis report are in agreement with the books of account;

iv. In our opinion, the aforesaid Ind AS financial statements comply with the Indian Accounting Standards prescribed underSection 133 of the Act read with relevant rules issued there under.

v. On the basis of written representations received from the Directors, as on 31st March, 2017 and taken on record by theBoard of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in termsof Section 164(2) of the Act.

vi. With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operatingeffectiveness of such controls, refer to our separate Report in "Annexure B".

vii. With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies(Audit and Auditors) Rules 2014, in our opinion and to the best of our information and according to the explanations givento us:

a) The Company has disclosed the impact of pending litigations on its financial position in its Ind AS financial statements- Refer note 2.30 to the financial statements;

b) The Company did not have any long term contracts including derivative contracts for which there were any materialforeseeable losses;

c) There was no delay in transferring amounts required to be transferred, to the Investor Education and ProtectionFund by the Company during the year.

d) The Company has provided requisite disclosure in its Ind AS financial statements as to holdings as well as dealingsin Specified Bank Notes during the period from November 8, 2016 to December 30, 2016 and these are in accordancewith the books of accounts maintained by the Company. Refer note 2.40 to the financial statements;


SUMEET SINGH DHIRPlace : Mumbai PartnerDate : 25th April, 2017 Membership No. 094370


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“ANNEXURE A”

ANNEXURE TO THE AUDITORS' REPORT

The annexure referred to in our report to the members of Swaraj Engines Limited ('the company') for the year ended 31stMarch 2017. We report that

(i) Regarding Fixed Assets:

a. The Company has maintained proper records to show full particulars, including quantitative details and situation ofFixed Assets;

b. The fixed assets have not been physically verified by the management during the year but the company has asystem of periodic verification of fixed assets. In our opinion, the frequency of verification is at reasonable intervalsconsidering the size of the company.

c. The title deeds of immovable properties are held in the name of the company.

(ii) Regarding Inventory:

a. The stocks of finished goods, stores, spare parts and raw materials of the Company in its possession have beenphysically verified by the management at reasonable period. Stock-in-transit as on 31st March 2017 has beenverified by the management on subsequent receipt of the goods.

b. In our opinion, the procedures of physical verification of stocks followed by the management were reasonable andadequate in relation to the size of the Company and nature of its business.

c. The company is maintaining proper records for inventory and discrepancies between the physical stocks and thebook stocks, which have been properly dealt with in the books of account, were not material.

(iii) Company has not granted any loan, secured or unsecured to companies, firms, Limited Liability Partnerships or otherparties listed in the register maintained under Section 189 of the Act.

(iv) In our opinion and according to the information and explanations given to us, the company has complied with the provisionsof section 185 and I86 of the Companies Act, 2013 in respect of loans, investments, guarantees, and security.

(v) The Company has not accepted any deposits from the public and hence the directives issued by the Reserve Bank ofIndia and the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptanceof Deposit) Rules, 2015 with regard to the deposits accepted from the public are not applicable.

(vi) On the basis of information given to us, we are of the opinion that, prima facie, the cost records and accounts prescribedby the Central Government of India, under sub section (1) of section 148 of the Companies Act 2013, have been maintained.However, we are not required to and have not carried out any detailed examination of such accounts and records.

(vii) Regarding Statutory Dues:

a) The Company has been regular during the year in depositing undisputed dues with Provident Fund, Employees'State Insurance, Income Tax, Sales Tax, Service Tax, Excise & Custom duty and other statutory dues with theappropriate authorities. According to the information given to us, there were no undisputed unpaid statutory duesoutstanding as at 31st March 2017 for a period of more than six months from the date they became payable.


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b) Details of dues of Income-tax & Excise Duty which have not been deposited as on 31st March, 2017 on account ofdisputes are given below :

(Rs. in lacs)

Statute Nature Forum where dispute is pending Amount involved

Central Excise Excise Duty Appellate Authority - Tribunal Level 25.59Act, 1944

Income Tax Act, 1961 Income Tax High Court 113.83

Assessing Officer 35.11

(viii) In our opinion and on the basis of records produced before us, the Company has not defaulted in the repayment of duesto Banks, Financial Institutions, Government or debenture holders.

(ix) The company has not raised moneys by way of initial public offer or further public offer including debt instruments andterm Loans. Hence, the provisions of clause 3 (ix) of the Order are not applicable to the Company and not commentedupon.

(x) Based upon the audit procedures performed and the information and explanations given by the management, we reportthat no fraud by the Company or on the company by its officers or employees has been noticed or reported during theyear.

(xi) Based upon the audit procedures performed and the information and explanations given by the management, the managerialremuneration has been paid or provided in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act;

(xii) In our opinion, the Company is not a Nidhi Company. Therefore, the provisions of clause 3 (xii) of the Order are notapplicable to the Company.

(xiii) In our opinion, all transactions with the related parties are in compliance with section 177 and 188 of Companies Act, 2013and the details have been disclosed in the Ind AS Financial Statements as required by the applicable Indian AccountingStandards.

(xiv) The company has not made any preferential allotment or private placement of shares or fully or partly convertible debenturesduring the year under review. Hence, the provisions of clause 3 (xiv) of the Order are not applicable to the Company andnot commented upon.

(xv) Based upon the audit procedures performed and the information and explanations given by the management, the companyhas not entered into any non-cash transactions with directors or persons connected with him. Accordingly, the provisionsof clause 3 (xv) of the Order are not applicable to the Company and hence not commented upon.

(xvi) In our opinion, the company is not required to be registered under section 45 IA of the Reserve Bank of India Act, 1934and accordingly, the provisions of clause 3 (xvi) of the Order are not applicable to the Company and hence not commentedupon.




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ANNEXURE: B TO AUDITORS REPORT

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013

We have audited the internal financial controls over financial reporting of SWARAJ ENGINES LIMITED, ("the Company") as onMarch 31, 2017 in conjunction with our audit of the Ind AS financial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internal financial controls based on "the internalcontrol over financial reporting criteria established by the Company considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India". These responsibilities include the design, implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence tocompany's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy andcompleteness of the accounting records, and the timely preparation of reliable financial information, as required under theCompanies Act, 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on ouraudit.

We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing, issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of InternalFinancial Controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Noterequire that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established and maintained and if such controls operatedeffectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls systemover financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weaknessexists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on theCompany's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financial reporting includes those policies andprocedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactionsand dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, ordisposition of the company's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion orimproper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also,


100

projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the riskthat the internal financial control over financial reporting may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reportingand such internal financial controls over financial reporting were operating effectively as at March 31, 2017, based on "theinternal control over financial reporting criteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India".



ATTENDANCE SLIP

SWARAJ ENGINES LIMITEDRegistered Office :

Phase-IV, Industrial Area, S.A.S. Nagar (Mohali), Punjab-160 055Tel. : 0172-2271620-27, Fax : 0172-2272731Email : [email protected];

Website : www.swarajenterprise.com

31st Annual General Meeting - 24th July, 2017

Please complete this Attendance Slip and hand it over at the entrance of the Meeting Hall.

NAME OF THE SHAREHOLDER/PROXYADDRESS

No. of Shares held :

I hereby record my presence at the 31st ANNUAL GENERAL MEETING of the Company at its Works at Plot No. 2,Industrial Phase IX, S.A.S. Nagar (Mohali), Punjab -160 062 on Monday, the 24th July, 2017 at 3:00 p.m.

*To be used for shares held inelectronic form SIGNATURE OF THE SHAREHOLDER/PROXY

$

Folio No. ....................

DP ID* ....................

Client ID* ....................

mailto:[email protected];


ROUTE MAP FOR AGM VENUE

SwarajEngines Limited

S.A.S. NAGAR

Tribune

Zirakpur

Punjab Mandi Board Bhawan

ISB

Sect

or 8

1S

ecto

r 82

CHANDIGARH

AIR

POR

T R

OAD

AIR

POR

T R

OA

D

PCA Cricket Stadium

from ChandigarhRailway Station&Panchkula

from Ambala&Delhi

ChandigarhInternationalAirport

from Kharar

PLOT NO. 2, PHASE IXINDUSTRIAL AREA

IISER

S.A.S. Nagar Railway Station

North Country Mall

NH 21NH 21

NH

21

NH

21

Notes:1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Office of the Company, not less than 48 hours

before the commencement of the Meeting.2. For the Resolutions, Explanatory Statement and Notes, please refer to the Notice of the 31st Annual General Meeting.

*3. It is optional to put a 'X' in the appropriate column against the Resolutions indicated in the Box. If you leave the 'For' or 'Against' column blank againstany or all Resolutions, your Proxy will be entitled to vote in the manner as he/she thinks appropriate.

4. Please complete all details including details of member(s) in the above box before submission.

PROXY FORM[Pursuant to Section 105(6) of the Companies Act, 2013 and rule 19(3) of Companies (Management and Administration Rules, 2014]SWARAJ ENGINES LIMITED(CIN: L50210PB1985PLC006473)Regd. Office: Phase IV, industrial Area, S.A.S.Nagar (Mohali), Punjab-160055, Tel. 0172-2271620-27, Fax : 0172-2272731Email:[email protected], Website: www.swarajenterprise.com

Name of the Member (s):

Registered Address:

Email id:

Folio / DP ID-Client ID No:

I/We, being the member(s) of ________________________________ shares of the above named Company hereby appoint :(1) Name __________________________________________ Address ___________________________________________

E-mail id _______________________________________ Signature ______________________________ or falling him;(2) Name __________________________________________ Address ___________________________________________

E-mail id _______________________________________ Signature ______________________________ or falling him;(3) Name __________________________________________ Address ___________________________________________

E-mail id _______________________________________ Signature ______________________________as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 31st Annual General Meeting of the Company,to be held on Monday, 24th July, 2017 at 3.00 p.m. at the Works of the Company at Plot No. 2, Industrial Phase IX, S.A.S.Nagar(Mohali), Punjab - 160062 and at any adjournment thereof in respect of such resolutions as are indicated below:

Resolutions Optional*Ordinary Business For Against

1 To receive, consider and adopt the Audited Financial Statements of the Company for theyear ended 31st March, 2017 and the Reports of the Directors and Auditors thereon.

2 Declaration of Dividend on Equity Shares.3 Re-appointment of Shri S. Durgashankar (DIN 00044713) as a Director, who retires by rotation

and, being eligible, offers himself for re-appointment.4 Re-appointment of Dr. Pawan Goenka (DIN 00254502)as a Director, who retires by rotation

and, being eligible, offers himself for re-appointment.5 Appointment of Auditors and fix their remuneration

Special Business6 Appointment of Shri Rajesh Jejurikar (DIN 00046823) as Director of the Company.7 Appointment of Shri Subhash Mago (DIN 07797207) as Director of the Company.8 Appointment of Shri Subhash Mago (DIN 07797207) as Whole Time Director of the Company

and approval of the remuneration payable to him.9 Ratification of the remuneration payable to the Cost Auditors of the Company.

Signed this _____________ day of ____________________ 2017

Signature of Shareholder ________________________________

Signature of Proxyholder(s) ______________________________

AffixRevenue

Stamp

mailto:Email:[email protected],


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